If you’re investing for the long haul and want to put your hard-earned money to work right away, some of the smartest investments you can buy are high-quality dividend stocks with reliable, above-average yields.
Dividend stocks are ideal for many investors because of the consistent passive income they generate, whether the market is rallying rapidly, flat, or even selling off. And when you’re looking to boost the yield your portfolio generates, those higher-yield dividend stocks can make a meaningful difference.
It’s essential to understand, though, that not all high-yield dividend stocks are worth buying. In fact, in many cases, a high yield can be a red flag that a company may be on the verge of trimming its dividend or cutting it altogether.
That’s why the priority should always be to find high-quality businesses first, and then look for the stocks that offer the most attractive yields from within that group.
So, with that being said, if you’ve got cash you’re looking to put to work today, here are two of the best and most reliable high-yield dividend stocks on the TSX to consider right now.
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One of the best dividend stocks on the TSX to buy now
If you’re looking for a reliable high-yield stock that can generate you attractive passive income over the long haul, royalty companies are some of the best to consider.
And with Pizza Pizza Royalty (TSX:PZA) currently trading off its 52-week high and offering a dividend yield of more than 6.1%, it’s easily one of the smartest stocks to buy now.
Pizza Pizza is one of the most reliable high-yield dividend stocks you can buy because of the simple business model that sees it earn consistent cash flow every quarter.
Instead of owning locations like many other restaurant peers, Pizza Pizza simply collects a royalty on all the sales done at its hundreds of locations across Canada.
This simple business model does two things. Firstly, it significantly lowers the risk for Pizza Pizza since it doesn’t have to worry about the individual profitability of its locations and instead is focused on system-wide sales across the country.
Furthermore, it makes its revenue and earnings highly predictable since system-wide sales don’t tend to fluctuate very much quarter over quarter or year over year.
In addition, Pizza Pizza is also one of the most convenient and low-cost options consumers have for fast food. That gives it a huge advantage, because even in tougher economic times when consumers are slowing discretionary spending, Pizza Pizza sees far less of an impact on its revenue than many of its restaurant peers.
So, if you’re looking for smart dividend stocks to buy now and hold in your portfolio for years, Pizza Pizza is certainly one I’d recommend investors consider.
An impressive royalty company with a dividend yield of 6.9%
In addition to Pizza Pizza, another high-quality royalty stock to buy now that offers investors a reliable and compelling dividend yield is Alaris Equity Partners (TSX:AD.UN).
Although Alaris is also a royalty-style company, its business model is much different than Pizza Pizza’s or any traditional dividend stock for that matter. Nevertheless, the stability of its cash flow is what makes it so appealing for investors who want predictable returns.
The stock provides capital to a diversified group of private businesses across North America. In exchange, Alaris receives monthly distributions based on each company’s revenue or cash flow. Because these arrangements are structured as preferred equity, though, Alaris sits higher in the capital stack than common shareholders, which helps keep its cash flow steady even during slower periods.
Furthermore, because Alaris invests in businesses with proven profitability and diversifies its capital across multiple industries and geographic locations, it naturally spreads out risk and helps smooth results over time.
That’s why Alaris can afford to pay such an attractive dividend and still have funds leftover to invest in new opportunities to create value for shareholders over the long haul.
So, while you can buy Alaris stock while it offers a dividend yield just shy of 7%, it’s easily one of the smartest investments you can make today.
