Canadian retirees ought to exhibit caution when hunting down dividend stocks with yields at the higher end. Indeed, yields may very well be the least attractive feature of a stock. Though it can help many of those living on a fixed income meet their retirement needs, I still think that going beyond a 5% yield requires much more due diligence.
You don’t want to feel all the pains that come with a dividend cut. It’s just too painful, especially if you’re no longer in the labour force. That said, you don’t need to stick with 3-4% yielders, especially if you’re more than willing to forego a bit of upside potential.
For retirees, passive income can matter a whole lot more than capital gains. That said, total returns, which comprise dividend payments along with capital appreciation, are what investors of all ages should seek to maximize. In this piece, we’ll check out two safer, high-yield dividend payers that I think make sense to buy in March.
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Restaurant Brands International
Restaurant Brands International (TSX: QSR) looks like an absolute market bargain after tumbling below the $90 per share level. With a 3.9% dividend yield and a very modest 19.9 times trailing price to earnings (P/E), you’re getting a lot of stable cash flow-generative firepower with the name.
Whether you’re a fan of daily double-doubles from Tim Hortons, the Whopper from Burger King, a three-piece meal from Popeyes Louisiana Kitchen, or the new tasty hot subs from Firehouse Subs, there’s something for everyone with QSR. With a solid footing in the fast-food value menu wars and modernization (renovation) efforts paying off, I view the quick-serve restaurant chain as a sleeping giant of sorts. Despite doing nothing in five years, shares look poised for greater growth as management pursues international frontiers.
With the firm buying out partners in Burger King China, it will be interesting to see which angle the firm takes next within the high-growth region. Either way, I’m a fan of the move as the firm looks to team up with dance partners who can take Burger King China to the next level.
Finally, investing legend Seth Klarman of Saupost recently loaded up on QSR shares in the fourth quarter of 2024. With around 2.9 million shares in the firm, Klarman seems to be a big believer in the deep value to be had in the underrated dividend titan that can keep on growing for years to come. I think Klarman is right on the money with QSR.
Pizza Pizza Royalty
If a 4% yield isn’t enough to satiate your appetite for passive income, perhaps Pizza Pizza Royalty (TSX: PZA) is worth checking out while its yield is above 7%. Though shares have been on a slow-and-steady descent, I view the correction off 2023 highs as more of a buying opportunity than anything else.
If tariffs push Canada’s economy into a downturn, affordable and convenient pizzas could be in relatively high demand. With one of the more affordable delivery pizza services in Canada, the firm looks poised to ride out a tariff war rather well. Additionally, Pizza Pizza and Pizza 73 are Canadian brands, which could benefit consumers as they buy into the “buy Canadian” mindset. It applies in the world of pizzas, too, making Pizza Pizza a prime share-taker you wouldn’t think of as we progress into 2025.
