Canadians are feeling the squeeze. Some are even drawing from investments to stay on track. When things get tight, every dollar matters. That’s why finding a reliable source of passive income, like a high-yield dividend stock, can make a big difference. And right now, Freehold Royalties (TSX:FRU) offers a yield that’s hard to ignore. At around 8.4%, it’s the kind of income-generating stock that’s worth buying and holding for the long haul.
Source: Getty Images
About Freehold
Freehold Royalties is based in Calgary and operates under a relatively simple business model. It doesn’t drill or manage oil rigs. Instead, it owns royalty interests on oil and gas properties across Western Canada and the United States. That means it collects a portion of revenue from producers that operate on its land. This royalty model comes with much lower risk than direct oil and gas exploration and development. The dividend stock avoids the high capital costs of drilling and doesn’t have to worry about operational surprises. Its role is to earn income from energy production without doing the heavy lifting.
As of writing, shares of Freehold were trading around $12.72. At that price, the dividend stock offers a monthly dividend of $0.09 per share, translating to an annual yield of about 8.4%. That’s far above what you’d get from a guaranteed investment certificate (GIC) or even most real estate investment trusts (REIT). And the dividend isn’t new, it has been consistent and even growing over the years. Right now, a $10,000 investment could earn you around $850 each year, or $70.74 every month!
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | INVESTMENT TOTAL |
|---|---|---|---|---|---|---|
| FRU | $12.72 | 786 | $1.08 | $848.88 | Monthly | $9,995.92 |
Can it last?
In its most recent earnings report, Freehold posted net income of $34.6 million, or $0.23 per share, for the first quarter of 2025. That’s nearly identical to the same period last year, showing the dividend stock holds steady despite fluctuating commodity prices. It also generated strong funds from operations, which support the ongoing dividend. Importantly, the dividend stocks payout ratio remained conservative, suggesting there’s room to maintain or even raise dividends if energy prices stay firm. That’s reassuring in a time when many Canadians are looking to stabilize their finances.
Freehold also benefits from a well-diversified base of assets and partners. Its royalty portfolio spans thousands of wells, meaning income doesn’t rely on one or two big projects. Even if one producer reduces output, there are plenty of others still contributing to Freehold’s cash flow. That diversification reduces risk and supports long-term sustainability. What’s more, insiders have continued to buy shares, a good sign that management believes the dividend stock is undervalued and has more upside.
There’s no denying that oil and gas stocks come with volatility. Prices fluctuate based on global supply, demand, and geopolitics. But Freehold’s model softens those shocks. Because it doesn’t operate wells directly, it’s less exposed to cost overruns or production issues. It simply collects its share from whatever is pulled out of the ground. That makes it a more stable income option compared to most energy producers.
Bottom line
In an economy where inflation is still sticky and many families are revisiting their budgets, a dependable income stream has real value. Canadians pulling from their savings to pay the bills could benefit from a stock like Freehold. It offers monthly income, capital preservation, and exposure to the energy sector without the baggage of high debt or operational risk. Over time, reinvesting those dividends can build real wealth, especially inside tax-sheltered accounts.
