This 8.3% Dividend Stock Pays Cash Every Month

This dividend stock is a prime target for investors wanting more income every month to bolster their TFSA for life.

| More on:
ways to boost income

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investing in dividend stocks is one of the smartest ways to build a passive-income stream. Think of it as planting a tree that doesn’t just grow in value over time but also bears fruit regularly. Dividends that land directly in your account. This strategy is particularly appealing to those aiming to achieve financial independence, supplement their income, or simply let their money work for them. Unlike other forms of investing that rely on selling assets for profit, dividend stocks allow you to keep your shares and still benefit from the company’s success.

Why dividend stocks

Dividend-paying companies are often well-established and financially stable businesses. These companies prioritize returning value to their shareholders, making them a safer option for those wary of volatile market swings. Unlike growth stocks, which may reinvest profits into expansion and pay little or no dividends, dividend stocks reward you consistently for your investment. This reliability is especially comforting during turbulent times in the market when stock prices may dip, but dividends keep flowing.

Another powerful aspect of dividend stocks is the opportunity for compounding. By reinvesting your dividend payouts back into purchasing additional shares, you allow your portfolio to grow faster. Over time, this snowball effect can lead to exponential growth in both your share count and the income you receive.

Created with Highcharts 11.4.3Diversified Royalty PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Consider DIV

Let’s narrow in on Diversified Royalty (TSX:DIV), a standout in the dividend stock universe. DIV is a unique company operating as a multi-royalty corporation. This means it earns income by acquiring royalties from well-managed businesses and franchisors across North America. These royalties provide steady cash flow, and because DIV’s income comes from multiple industries, the company has built-in diversification. This mitigates risk and ensures the company isn’t overly reliant on a single sector or revenue stream.

As of writing, DIV’s stock trades at $3.02, offering a forward annual dividend rate of $0.25 per share. This translates to a dividend yield of 8.28%, which is significantly higher than the yields offered by many other dividend stocks. High yields like this make DIV an excellent choice for income-focused investors looking to maximize their returns.

Recent earnings demonstrate DIV’s consistent ability to deliver value to its shareholders. In the most recent quarter, the dividend stock reported revenue of $16.78 million, reflecting strong year-over-year growth of 18.3%. Earnings per share (EPS) came in at $0.05, meeting expectations and showcasing the company’s ability to maintain stable profitability.

Looking ahead

DIV’s financial metrics further illustrate its strong footing. The dividend stock’s operating margin of 90.10% is exceptionally robust. Thus signalling efficient operations and significant profit generation relative to revenue. Meanwhile, its profit margin stands at 49.26%, indicating that almost half of its revenue translates into actual profit. These metrics underscore the company’s ability to continue funding its generous dividend payouts.

Looking forward, DIV’s strategy is all about growth. The dividend stock is focused on acquiring additional royalty streams, which will diversify and expand its cash flow even further. This proactive approach not only enhances the stability of its income but also creates opportunities for future dividend increases. For investors, this means the potential for both growing passive income and share price appreciation.

Another appealing feature of DIV is its history of rewarding shareholders. Over the past five years, its average dividend yield has been 8.54%, illustrating a strong commitment to maintaining a high yield. This reliability is key for investors who depend on dividend income, whether for retirement or as a supplement to other earnings.

Bottom line

For those looking to build a robust passive-income portfolio, Diversified Royalty checks all the right boxes. Its diversified revenue streams, high and reliable dividend yield, and strong financial metrics make it a compelling option for long-term investors. Whether you’re reinvesting dividends to grow your portfolio or living off the income, DIV offers stability and growth potential in one neat package. With its forward-looking strategy and consistent track record, it’s no wonder this stock has become a favourite for Canadian dividend investors.

Should you invest $1,000 in Brookfield Asset Management right now?

Before you buy stock in Brookfield Asset Management, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Brookfield Asset Management wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Dividend Stocks

3 Canadian REIT Stocks to Buy and Hold for the Next Quarter-Century

These three Canadian REITs trade cheaply and are highly reliable, making them some of the best stocks you can buy…

Read more »

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Dividend Stocks

1 Practically Perfect Canadian Stock Down 24% to Buy Now and Hold for Life!

CNR stock is a top Canadian stock for investors, especially with shares down on the TSX today.

Read more »

Canada national flag waving in wind on clear day
Dividend Stocks

The Best Canadian Stocks to Buy Right Away With $30,000

If you have $30,000 you're willing to invest, these are some of the first Canadian stocks to consider on your…

Read more »

rail train
Dividend Stocks

What to Know About Canadian Pacific Railway Stock for 2025

CP stock has now gone through a major merger, so what do investors have to look forward to?

Read more »

ways to boost income
Dividend Stocks

Top Canadian Value Stocks I’d Buy for Dividend Growth and Appreciation

If you are looking for income and capital appreciation, here are three Canadian value stocks for a great total return…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Canadian Stock to Buy With $2,000 Right Now

The company’s powerful combination of growth, income, and value, positions it well to deliver solid returns, making it a smart…

Read more »

Transparent umbrella under heavy rain against water drops splash background. Rainy weather concept.
Dividend Stocks

This 10.6 Percent Dividend Stock Pays Cash Every Single Month

Are you looking to invest for a rainy day? This 10.6% dividend stock pays cash every month, irrespective of the…

Read more »

A worker gives a business presentation.
Dividend Stocks

Market Dip: Opportunity or Risk This April?

This market dip might have investors worried, but should they be excited instead?

Read more »