A 4.5% Dividend Stock Paying Safe Cash Every Quarter!

High yields aren’t everything, but it certainly helps — especially when considering a rebounding dividend stock.

Creating reliable passive income is a goal many Canadians share, especially as interest rates stay uncertain and market volatility makes growth investing a tougher game. In this environment, steady dividend-paying investments are back in focus, particularly those that pay stable yields. One option flying under the radar is DRI Healthcare Trust (TSX: DHT.UN), a healthcare-focused royalty trust that combines a strong income stream with exposure to a defensive sector.

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The stock

DRI Healthcare Trust isn’t your typical dividend stock. Rather than operating hospitals or manufacturing pharmaceuticals, it buys the rights to royalties from top-selling medical products. That means it earns a portion of the revenue every time a drug or therapy it holds a stake in is sold. This business model gives it exposure to blockbuster drugs without the risks and costs of research and development. Think of it as a landlord of medicine: it collects rent on intellectual property.

As of May 2025, DRI Healthcare Trust is yielding approximately 4.5%. This is attractive when compared to traditional income stocks on the TSX. The trust pays out $0.14 per unit every quarter, or about $0.55 annually, and those payouts have been consistent since 2021.

The numbers

In its most recent earnings report for the first quarter of 2025, the trust posted a total income of US$44 million and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of US$51.7 million. Perhaps even more important, its normalized total cash receipts reached US$62 million, underscoring how dependable its royalty income has become. The trust holds 28 royalty streams on 21 different products, including key therapies in oncology, autoimmune disorders, and rare diseases. These are long-duration assets with multi-year patent protections, meaning DRI’s income stream is expected to remain strong even in turbulent markets.

One of the biggest developments in 2025 for DRI Healthcare Trust has been its decision to internalize its management. Previously, it was externally managed by DRI Capital, which collected fees and incentives. In May 2025, the trust announced that it would acquire DRI Capital’s business and terminate the external management agreement. This move is expected to save about US$200 million over the next decade and directly aligns management’s interests with those of investors. The internalization also improves transparency and removes any perceived conflicts of interest, something institutional investors tend to favour.

Future focus

Unlike traditional high-yield energy or real estate stocks, DRI Healthcare Trust gives exposure to a sector that’s growing globally. Healthcare spending continues to rise as populations age and demand for new therapies grows. With rising costs of drug development, pharmaceutical companies are increasingly monetizing their existing royalty streams, therefore DRI has plenty of opportunities to expand its portfolio without taking on development risk.

The stock has a market capitalization of around $652 million. That suggests it’s relatively undervalued compared to many of its peers, especially given its strong free cash flow and yield. It also has minimal debt and a disciplined approach to acquisitions. The trust’s strategy is to focus on top-selling, clinically relevant therapies with long intellectual property protection. That’s a recipe for dependable returns.

Bottom line

While it doesn’t pay monthly, DRI Healthcare Trust still stands out as a compelling option for income-seeking investors. It offers a rare combination of high yield, inflation protection, and sector resilience. In a time when many are hunting for safe places to earn income without giving up growth potential, this trust hits a sweet spot. As always, it’s important to do your own due diligence. But if you’re looking for a dividend stock that pays you quarterly while tapping into long-term healthcare demand, DHT.UN might just deserve a spot in your portfolio.

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.

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