The Toronto Stock Exchange broke several records in 2025. Canada’s main stock market rewarded investors with meaningful returns, both dividend income and capital appreciation. Income-focused investors can strategically deploy $18,000 in three high-yield stocks today to create $1,377 in annual passive income in 2026.
My hand-picked selection includes Firm Capital (TSX:FC), Surge Energy (TSX:SGY), and Diversified Royalty Corporation (TSX:DIV). Besides their accessible entry points (less than $12 per share), the average dividend yield is a hefty 7.65%.
Income powerhouse
Firm Capital, a $433.5 million mortgage investment corporation (MIC), provides conventional real estate mortgages and extends short-term bridge financing. At $11.80 per share, the dividend yield is 7.9%. This non-bank lender hasn’t missed a monthly dividend payment since January 2013 and has declared special year-end dividends every year.
The MIC focuses on select niche markets underserved by traditional large lenders. Approximately 88.9% of the total portfolio is conventional first mortgages. Furthermore, because 92% of the portfolio is on floating interest rates, Firm Capital can maintain strong margins even if the Bank of Canada adjusts its policy rates.
In the first three quarters of 2025, comprehensive income increased 10% year-over-year to $28.7 million. The average income in the last three years is $33.7 million. Management continues to preserve shareholders’ capital by operating in niche markets. It also maintained a diversified portfolio of predominantly first mortgages.
Unique industry position
Surge Energy has kept pace with the broad market’s historic surge in 2025. At $6.56 per share, the year-to-date gain is 22.6%. If you invest today, the dividend yield is a juicy 7.9%. A $6,000 (1/3 of $18,000) investment will generate $475.80 in passive income ($39.65 monthly).
The $649 million oil and gas exploration and production company operates in Alberta and Saskatchewan, focusing on conventional light and medium crude oil. In the first three quarters of 2025, net income reached $47.4 million compared to the $51.1 million net loss in the same period in 2024.
According to its Chief Financial Officer, Travis Guidry, Surge Energy is well-positioned to weather commodity cycles due to its minimal net debt (less than 0.2x net leverage ratio) and substantial liquidity ($1 billion after three quarters).
Low-risk profile
Diversified Royalty is a low-priced dividend titan. At only $3.72 per share, you can partake in the lucrative 7% dividend. Like Firm Capital and Surge Energy, the payout frequency is monthly. Note that the year-to-date gain is 38.8% versus the TSX’s plus-28.4%.
This $633.4 million company isn’t an operator; it collects royalties from ongoing business concerns. The stock has a low-risk profile due to the different businesses of its nine royalty partners. Mr. Lube + Tires is the top provider among the seven Canadian royalty partners. The newest in the royalty pool are Stratus and Cheba Hut, both U.S.-based.
Management desires to continue paying predictable and stable monthly dividends as long as cash flows allow. After three quarters in 2025, distributable cash was $39.6 million, up 15% from a year ago.
Profitable blend
You can anchor your $18,000 portfolio, or $6,000 each, in Firm Capital, Surge Energy, and Diversified Royalty. You’d have a diversified blend of small-cap stocks with high yields paying monthly dividends.
