Many investors are drawn to dividend stocks for the passive income they provide and inherent stability they often offer. Moreover, finding a high-quality dividend stock with a high yield can make it one of the best Canadian dividend stocks to buy today.
The key, however, is to prioritize the quality of the stock over its yield. High-yield stocks can sometimes be a red flag, indicating potential risks. But when you first look for a stock that is high quality, discovering it also offers a high yield becomes an added bonus.
So, with that in mind, if you’re looking to boost the passive income your portfolio provides, here are three of the best high-yield dividend stocks Canadian investors can buy now.
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A stock that’s made specifically for passive income seekers
If you’re looking for a high-quality Canadian dividend stock with a compelling dividend yield that you can buy right now, Pizza Pizza Royalty (TSX: PZA) has to be a top consideration.
Pizza Pizza is an ideal dividend stock due to its low-risk nature and the fact it aims to return essentially all of its earnings back to investors.
It’s low risk because it doesn’t own any restaurants itself; it simply collects a royalty on all the sales done at the hundreds of restaurants across the country. Furthermore, not only does it have minimal expenses, which hardly fluctuate from quarter to quarter, but its revenue has been historically steady as well.
Therefore, because of the predictability of its operations, Pizza Pizza can aim to pay out essentially all of its earnings, and today, it offers a yield of roughly 7.1%.
So, if you’re looking for a high-yield dividend stock to buy now, Pizza Pizza is certainly one of the best investments Canadian investors can consider today.
A top Canadian utility stock
Another excellent Canadian dividend stock to buy now is Emera (TSX: EMA), the ultra-reliable utility stock.
While its yield is lower than Pizza Pizza’s at just 5.4% today, that’s actually a pretty high yield for the utility sector, which is well-known as one of, if not the most, defensive sector you can invest in.
Not only are Emera’s sales and earnings reliable due to the essential services it provides and government regulation that the utility industry has, but its sales and earnings are also highly predictable, which is why Emera is one of the least volatile stocks on the market.
That predictability also allows Emera to consistently increase the cash it returns to investors, making it not only one of the best high-yield stocks to buy but also one of the best dividend growth stocks to invest in as well.
Therefore, while Emera trades off its 52-week high and its current yield of 5.4% sits well above its five-year average forward yield of 5%, it has to be considered one of the best dividend stocks to buy now.
One of the best dividend stocks in the energy sector to buy now
In addition to Pizza Pizza and Emera, Freehold Royalties (TSX: FRU) is another excellent dividend stock to buy now.
As its name suggests, Freehold is a royalty stock similar to Pizza Pizza. However, instead of collecting a royalty from sales done at restaurants across the country, Freehold earns a royalty on all the oil or gas that’s produced on the land it owns.
That means, like Pizza Pizza, Freehold is a lower-risk business that generates significant cash flow. Unlike Pizza Pizza, though, Freehold’s revenue is less predictable, especially due to the volatility of the commodity market.
Therefore, Freehold aims to keep its payout ratio at roughly 60%, ensuring its sustainability but also retaining more earnings to invest in acquiring more land and growing its business.
That’s why it’s one of the best high-yield dividend stocks to buy now. Not only does it have a current yield of 8.5%, but it also pays out less of its earnings, helping to mitigate risk if commodity prices fall. Not to mention, it has impressive long-term growth potential.
So, if you’re looking for a high-yield dividend stock to buy now and hold for years, Freehold is certainly one of the best investments Canadians can consider today.
