Despite the signs of easing, inflation remains higher than the central bank’s guidance of 2%. With inflation lowering your buying power, you could invest in high-yielding dividend stocks to earn a stable passive income. Here are three TSX stocks that trade under $30 while offering an over 5% dividend yield.
Telecommunication companies are excellent defensive stocks to have in your portfolio, as telecommunication services have become essential in this digitally connected world. Besides, the recurring revenue streams deliver stable and predictable cash flows. So, I have selected Telus (TSX:T) as my first pick.
The company utilized the low-interest rate environment to accelerate its growth strategy to expand its 5G and high-speed broadband infrastructure over the last decade. It currently offers 5G service to 85% of the country’s population, while the PureFiber network connects 3.1 million locations. Besides, the company is also expanding its health services, and agriculture and consumer goods services segments, which could continue to boost its financials in the coming years.
Supported by its solid cash flows, Telus has raised its dividend 25 times since 2011. With a quarterly dividend of $0.3761/share, its forward yield is at a juicy 6.04%. Further, the company’s management hopes to raise its dividend at an annualized rate of 7–10 % through 2025, thus making it an intriguing buy.
Northland Power (TSX:NPI) focuses on producing energy from renewable sources. It has an economic interest in facilities with a total power-producing capacity of 3.4 gigawatts. The company earns substantial revenue from long-term PPAs (power purchase agreements) with governments and blue-chip clients. The weighted average of these PPAs stands at over 14 years. So, its cash flows are stable and predictable irrespective of the macro environment, thus allowing it to reward its shareholders with healthy dividend payouts. With a monthly dividend of $0.10, its forward yield is at 5.54%.
Further, the company could benefit from the increased transition towards clean energy. Besides, it is looking at strengthening its offshore wind projects in Europe and Asia and onshore assets in North America and Europe. These developmental projects could increase its production capacity to 6 gigawatts by 2027, representing an annualized growth rate of 17%. Given its healthy growth prospects and a cheaper NTM (next 12 months) price-to-earnings multiple of 17.5, I am bullish on Northland Power.
Pizza Pizza Royalty
My final pick would be Pizza Pizza Royalty (TSX:PZA), which operates a highly franchised restaurant business. It collects royalties from its franchisees based on their sales, thus making its financials immune to rising commodity prices. Besides, the company has been growing its same-store sales at a healthier rate this year amid new menu launches and promotional activities. It also continued to expand its restaurant network, which drove its financials, thus allowing it to raise its monthly dividends three times this year.
PZA currently pays a monthly dividend of $0.07755/share, with its forward yield at 6.47%. Meanwhile, the company’s management expects to increase its restaurant count by 3–4% this year while renovating its old restaurants. Besides, its same-store sales could remain solid, given its value proposition and convenience. Further, PZA’s dividend payout ratio stands at 97%. The reserves could help in smoothening out its dividends as seasonal variations are inherent to the restaurant industry.