In today’s unpredictable environment, building a secondary or passive income stream can strengthen financial stability, mitigate risks, and offer greater flexibility in lifestyle and career choices. Given the low-interest-rate environment, investing in high-yielding dividend stocks that provide monthly payouts would be an excellent means to earn a stable and reliable passive income. Also, if you make these investments through your TFSA (Tax-free savings account), you can avoid paying taxes. Meanwhile, here are my three top picks.
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SmartCentres Real Estate Investment Trust
Given their requirement to distribute 90% of taxable income, REITs (Real Estate Investment Trusts) present a compelling investment option for income-oriented investors. I have chosen SmartCentres Real Estate Investment Trust (TSX: SRU.UN), which operates 197 strategically located properties across Canada, as my first pick. Around 90% of Canadians have at least one SmartCentres’s shopping centre within 10 kilometres. In addition to its strategically located properties, the company’s strong tenant base has supported a robust occupancy rate, which came in at 98.6% in its recently released second-quarter results.
Moreover, the demand for retail space continues to grow, driven by limited supply, population growth, and sustained low vacancy rates. The company continues to expand its portfolio with 58.9 million square feet of developmental approvals. Of these, 0.8 million square feet of properties are currently under construction. Additionally, it has recently opened three self-storage facilities, and the construction of two other facilities is underway, with management projecting that these facilities will open next year. Its healthy occupancy rate and continued portfolio expansion could boost SmartCentres’s financial growth, thereby supporting its healthy dividend payouts. Currently, the REIT offers a monthly payout of $0.1542 per share, representing a forward dividend yield of 7% as of the September 29 closing price.
Whitecap Resources
Another high-yielding dividend stock that I believe would be ideal for boosting your passive income is Whitecap Resources (TSX: WCP), which operates oil and natural gas production facilities in the Western Canadian region. Through its strategic combination with Veren, the company has emerged as Canada’s seventh-largest oil and natural gas producer. The merger not only boosted production capacity but also strengthened its balance sheet with improved liquidity and reduced leverage.
Meanwhile, early synergies from the integration of Veren’s assets and workforce have supported cost consolidation and strengthened the company’s credit profile. WCP’s management also anticipates that leveraging shared learnings and expertise across its consolidated portfolio will deliver additional improvements in capital efficiency and operating cost savings within the next 6 to 12 months. Additionally, the company plans to invest approximately $1.2 billion in the second half of this year to strengthen its production capabilities. Considering these factors, I believe WCP, with a forward dividend yield of 6.7%, is well-positioned to sustain healthy dividend payments.
Pizza Pizza Royalty
Pizza Pizza Royalty (TSX: PZA) presents another compelling option for investors seeking reliable monthly dividend payouts. It has adopted a highly franchised business model, operating 694 Pizza Pizza and 100 Pizza 73 brand restaurants through its franchisees. The pizza shop franchisor earns royalties from franchisee sales, making its financials less vulnerable to higher commodity prices and wage inflation.
Management plans to distribute all available cash to shareholders while maintaining reasonable reserves to stabilize dividends against the seasonal fluctuations inherent to the restaurant industry. PZA stock currently pays a monthly dividend payout of $0.0775/share, translating into a forward dividend yield of 6%.
Moreover, PZA has reported a healthy same-store sales increase of 2.1% in the second quarter, driven by menu innovations and strategic sports partnerships. Additionally, it is expanding its footprint and anticipates a 2–3% increase in its traditional restaurants this year. Furthermore, it is renovating old restaurants, which could help drive footfall. Considering all these factors, I believe PZA is well-positioned to deliver stable and attractive dividends in the future.
