Dividend investing is an excellent way for investors to get the best return on investment for any money they might be setting aside for their financial goals. While you can earn interest income by parking your money in a high-interest savings account, the rate of return through interest cannot beat the kind of monthly passive income you can generate with some TSX stocks.
The TSX has no shortage of monthly dividend-paying stocks that you can buy to boost your passive income. There are even those that yield over 5%. Investing in these can be a source of regular, predictable income, supplementing your active income. Here are three monthly dividend stocks to consider adding to your self-directed investment portfolio.
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Freehold Royalties
Freehold Royalties Ltd. (TSX: FRU) is a $2.9 billion market-cap royalty income trust that offers you the chance to generate returns from the oil and gas industry but without the typical risks that come with the energy sector. While most oil and gas companies face extreme volatility due to fluctuating commodity prices, Freehold is in the business of simply collecting royalties from oil producers using its properties.
Instead of dealing with the overhead that operators typically face, Freehold allows other energy industry operators to use its properties, and it keeps only its share of the money that the commodities generate. The company owns over 7 million acres of land in shale basins and conventional oil regions across Canada and the US, generating revenue with excellent margins that let it sustain its monthly dividends.
As of this writing, it trades for $17.54 per share, pays $0.09 per month per unit, translating to a 6.2% annualized dividend yield.
Boston Pizza Royalties Income Fund
Boston Pizza Royalties Income Fund (TSX: BPF.UN) is another income fund, but it operates in a completely different industry. The $597.5 million market-cap fund is a major casual dining brand in the country. Boston Pizza has an extensive network of franchise owners that operate locations nationwide. BPF generates revenue by collecting royalties from the franchises that operators in the local network run across Canada.
The company generates revenue by collecting 4% of royalties from franchise sales across all the locations. Boston Pizza enjoys being a favourite for many by operating locations as family restaurants and sports bars, catering to a wide range of people. Competitors find it challenging to offer the same appeal, improving the performance of the Boston Pizza brand and the fund. In turn, the fund provides monthly returns to its investors that are backed by regular monthly returns.
As of this writing, BPF trades for $25.20 per unit, paying investors $0.12 per share each month, translating to a 5.8% dividend yield.
Dream Industrial REIT
Dream Industrial REIT (TSX: DIR.UN) is another trust that delivers monthly returns to investors, but it has nothing to do with the energy or restaurant sectors. Instead, this is a pure-play in the real estate sector, particularly in the industrial sector. The company owns and manages a diversified portfolio of industrial properties in key markets across Canada, Europe, and the US.
The Real Estate Investment Trust (REIT) offers you the chance to earn monthly returns like a lazy landlord. Dream Industrial does all the hard work of owning and managing the properties, collecting money from its tenants. Investors get monthly returns based on the number of units they hold. As of this writing, Dream Industrial REIT trades for $13.20 per unit, pays investors $0.05833 per share each month, translating to a 5.2% dividend yield.
Foolish takeaway
These three monthly dividend stocks have solid managements, the underlying businesses are doing well, and they boast high-yielding returns. If you want to add an extra kick to your overall monthly income, investing in these dividend stocks might be a good strategy.
