In today’s market, finding a dividend stock that pays a juicy dividend every single month is a rare treat, especially one that’s not just paying, but doing so with a yield near 9%. That’s where Freehold Royalties (TSX:FRU) enters the picture. It’s quietly been delivering monthly income to shareholders while building a stable and expanding business in the oil and gas royalty space. If passive income is what you’re after, this is a stock that deserves your attention.
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About Freehold
Freehold isn’t in the business of drilling or operating pipelines. That’s what makes it different. It’s a royalty company. That means it owns the rights to receive a slice of the revenue from oil and gas production done on its lands, but it doesn’t cover the drilling costs. This model tends to be lower risk, especially in times of price volatility and allows it to maintain strong margins.
The dividend stock holds over 6.5 million gross acres of royalty lands across Canada and the United States. It collects revenue from dozens of producers operating on these lands, and those royalties add up quickly. In fact, in its most recent earnings report for the first quarter of 2025, Freehold brought in $91 million in revenue. That was up from $74 million in the first quarter (Q1) of 2024, marking a 23% year-over-year increase. And it did that without getting its hands dirty in the day-to-day operations of drilling rigs.
Its funds from operations (FFO) came in at $68 million, or $0.42 per share, up from $0.38 in the same quarter last year. That’s important because it’s FFO that supports its monthly dividend. With a payout of $0.09 per share each month, the current annualized payout stands at $1.08. Based on the recent share price of around $12.42, that gives investors a forward yield of about 8.8%. And yes, that’s paid monthly, like clockwork. In fact, here’s how much investors would gain from a $20,000 investment.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | INVESTMENT TOTAL |
|---|---|---|---|---|---|---|
| FRU.TO | $12.42 | 1,610 | $1.08 | $1,738.80 | Monthly | $19,996.20 |
Worth the investment?
Is it worth the buy? Freehold paid out $44 million in dividends during the quarter. That works out to a payout ratio of about 65% of its FFO, which is comfortably below the danger zone and suggests the dividend is not only sustainable but potentially has room to grow if earnings continue to rise. The dividend stock stated that it aims for a balanced approach, prioritizing strong returns for shareholders while also maintaining a healthy balance sheet.
Speaking of the balance sheet, Freehold ended the quarter with net debt of $272 million. That might sound like a lot, but it’s just 1.1 times trailing 12-month FFO. In the world of energy investing, that’s a very manageable level of debt. It gives Freehold the flexibility to keep investing in new royalty lands without overextending itself.
What’s also impressive is where the money’s coming from. Freehold is increasingly weighted toward U.S. production, which made up 54% of total revenue last quarter despite only representing 43% of production volume. Why the imbalance? It’s because the U.S. assets are more profitable, thanks to higher prices and lower transportation costs. In Q1, it realized US$72.64 per barrel of oil equivalent from its U.S. portfolio, compared to $49.26 in Canada.
Bottom line
For Canadian investors looking to generate income without a ton of work, Freehold’s monthly dividend is hard to beat. It pays investors just for holding shares. It also provides some exposure to oil and gas prices, which can add a bit of upside if commodities move higher in the coming quarters.
In the end, Freehold Royalties is a smart choice for investors who want to combine income with a bit of long-term growth potential. It doesn’t overextend itself, it keeps debt in check, and it pays a solid monthly dividend that lands in your account whether the market is up or down. For a dividend stock under $15, that’s a powerful combination. And in a world of rising costs and uncertain markets, getting a steady 8.8% yield just for holding shares feels like a win.
