Investing in fundamentally strong TSX stocks with high yields can help generate solid passive income. Investors should focus on companies backed by sustainable payouts and a growing earnings base, as they will most likely pay, maintain, and increase their dividends over time. Against this backdrop, here are three dividend stocks with a compelling yield of at least 7% to buy today.
Source: Getty Images
SmartCentres REIT
SmartCentres REIT (TSX: SRU.UN) should be on your radar for its high and dependable yield. This real estate investment trust is known for its durable monthly payouts backed by its high-quality assets, which generate solid net operating income (NOI) and funds from operations (FFO).
SmartCentres REIT currently pays $0.154 per share in monthly dividends, equating to a compelling yield of over 7.5% based on its recent closing price of $24.58 (as of November 1, 2024). Since the REIT pays dividends every month, it aligns with monthly expenses. Also, reinvesting these dividends can significantly enhance your returns over time.
SmartCentres REIT’s retail properties are located in high-traffic areas, which drive demand and customer retention. Moreover, its properties witness high occupancy and rent collection rates. With steady leasing demand and momentum in renewal rates, SmartCentres is well-positioned to deliver solid NOI and FFO, which will support its payouts. Also, its focus on diversifying its portfolio with mixed-use properties will increase its recurring income base and support future growth.
The REIT is also likely to benefit from its large, underutilized land bank, which provides significant room for future growth.
BCE
BCE (TSX: BCE) is an attractive TSX stock to start a passive income stream. Shares of this Canadian communication giant offer a compelling yield of 8.9%. While heightened competition has weighed on BCE stock and driven its yields higher, its payouts are sustainable, considering the company’s ability to grow its earnings consistently and focus on rewarding its shareholders.
The telco has raised its dividend for 16 consecutive years and remains on track to increase its dividends further in the coming years. While the company faces competitive headwinds, its focus on efficient promotions, fast 5G mobile services, and extensive broadband fibre network will likely drive its customer base and profitability.
BCE is also diversifying its revenue streams and focusing on high-growth areas such as digital advertising, cloud-based computing, managed automation, and security services. These segments are likely to boost its revenues and earnings. In addition, BCE’s cost reduction measures augur well for earnings growth, driving higher dividend payments.
Pizza Pizza Royalty
Pizza Pizza Royalty (TSX: PZA) stock is an attractive option for income investors looking for consistent passive income and high yields. The company, which operates and franchises a network of quick-service restaurants, distributes all of its cash to investors after retaining the required reserves. In 2023, PZA stock raised its dividends three times, reflecting 10.7% growth. Further, it pays monthly dividends and offers a yield of over 7% near the current levels.
The company remains committed to rewarding its shareholders with regular dividend payments. It is consistently growing its same-store sales, driven by an increase in guest traffic and the average customer cheque, which supports its payouts.
Looking forward, its diversified revenue streams – including royalty income and food and beverage sales – a growing network of restaurants, strategic menu pricing, and ongoing food quality and technology investments, will likely bolster its cash flows and dividend payouts. Further, momentum in its in-store pickup channel and focus on utilizing third-party food delivery platforms to reach new customers augur well for growth.
