3 Fabulous Dividend Stocks to Buy in April

If you’re looking to boost your passive income while interest rates are elevated, here are three of the best dividend stocks to buy in April.

Daniel Da Costa

Author Bio Daniel joined The Motley Fool Canada in 2019 and brings experience in banking, investing, and financial analysis. Growing up as the son of a proprietary stock trader and educator, he developed an early interest in financial markets and a passion for helping Canadians improve their financial well-being. His work spans investment research, economic analysis, and econometric modelling, with a focus on understanding the broader forces that influence businesses, markets, and the economy. As an investor, Daniel looks for high-quality businesses with long-term growth potential, reliable income, and attractive valuations. Outside of finance, Daniel enjoys spending time with his family, playing hockey, running, and sailing. Areas of Expertise Investment research, economic analysis, econometric modelling, banking, financial analysis, business fundamentals, long-term investing, dividend investing, and company valuation. Favorite Investment Quote "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." — Warren Buffett

Published April 28, 2024 9:15 am EDT

Although stock markets in North America have begun to rally again over the last few days, many high-quality Canadian stocks remain undervalued. Therefore, while some of the best dividend stocks on the TSX trade at such compelling discounts, it’s the perfect opportunity to buy these investments today and hold them for years.

Dividend stocks are ideal for several reasons, especially in this market environment. First, in order to pay a dividend, stocks need to consistently earn enough profit and cash flow to take cash from the business and pay it to investors. So, you know these are well-established and profitable businesses.

Furthermore, with interest rates already at high levels and with many expecting they will start declining over the coming months, many of these dividend stocks could see a significant rally as yields begin to fall.

So, if you’ve got cash on the sidelines you’re looking to invest and take advantage of the opportunities in the market today, here are three fabulous dividend stocks to buy in April.

dividends grow over time — Source: Getty Images

One of the best stocks that Canadian dividend investors can buy in April

If you’re a dividend investor looking to boost your passive income, one of the best Canadian dividend stocks I’d recommend is Pizza Pizza Royalty (TSX: PZA).

Pizza Pizza is a stock made specifically for dividend investors. The business model is extremely simple: the corporation earns a royalty from all the Pizza Pizza and Pizza 73 locations nationwide. Then, the majority of the cash it collects is returned to investors.

Pizza Pizza only has to pay a small administration fee to run the corporation, as well as taxes and interest, and the rest of the cash is available to return to investors.

In fact, in 2023, Pizza Pizza generated sales of $40.2 million and a net income of roughly $31 million, as it paid out essentially all of its earnings.

That’s why Pizza Pizza is one of the best dividend stocks to buy now. Its simple business model relies only on increasing the total number of sales at all Pizza Pizza and Pizza 73 locations. The corporation doesn’t have to worry about the individual profitability of each store.

Furthermore, with Pizza Pizza being well-known as a low-cost and convenient option, it’s proven repeatedly that it’s much more defensive than its restaurant stock peers.

Therefore, if you’re looking for top dividend stocks to buy now, Pizza Pizza is an ideal choice, especially while it trades near the bottom of its 52-week range and offers investors a yield of roughly 6.9%.

Two top Canadian real estate stocks

In addition to royalty companies like Pizza Pizza, real estate stocks are some of the best investments to boost your passive income. And while there are several high-quality real estate investment trusts (REITs) to consider, two of the best are Granite REIT (TSX: GRT.UN) and Morguard North American Residential REIT (TSX: MRG.UN).

REITs are ideal because they constantly receive tonnes of cash flow each month, similar in many ways to Pizza Pizza.

In Granite’s case, the REIT owns industrial assets such as warehouses and distribution centres with over 100 properties diversified across North America and Europe.

The REIT is one of the best to buy, considering its track record of execution and the fact that industrial real estate continues to have tremendous growth potential as the demand for these properties constantly increases, especially with the continuously growing popularity of e-commerce.

While demand has slowed over the last few years as the economy has faced increased headwinds, so too has investment in the space, resulting in less capacity despite a slowdown in demand.

Therefore, while Granite trades near its 52-week low and offers a yield of 4.7%, it’s one of the best dividend stocks to buy in April.

In Morguard’s case, residential real estate is not only one of the most defensive industries in the economy, but the REIT’s portfolio is extremely well diversified, with properties all over the U.S. and parts of Canada.

This not only offsets regional risks but also exposes Morguard to more growth potential, which was key in helping it grow its profitability over the last few years, particularly as inflation caused its costs to soar.

So, if you’re looking for top dividend stocks to buy now, Morguard, with its 4.8% yield, is certainly one of the best.