If you are hunting for a Canadian dividend stock that deposits cash into your account every single month, Diversified Royalty Corp (TSX:DIV) deserves a spot on your watchlist.
Diversified Royalty is not a household name like the big banks or telecom stocks. However, valued at a market cap of $872 million, the TSX stock has returned 357% to shareholders over the past decade, after adjusting for dividend reinvestments.
DIV owns the trademarks and collects royalties from a group of well-known Canadian and U.S. franchise brands, including Mr. Lube + Tires, Sutton, Mr. Mikes, Nurse Next Door, Oxford Learning Centers, Stratus Building Solutions, BarBurrito, Cheba Hut, and AIR MILES.
Instead of running these businesses day-to-day, DIV earns a percentage of system-wide sales from each franchisee, which generates steady, predictable cash flow.
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Why this monthly dividend stock is a good buy
DIV pays a monthly dividend of $0.285 per share, annualized, which translates to a yield of over 6%.
On May 14, 2026, the company announced a deal to acquire the Mr. Lube + Tires franchisor business outright for $235 million. DIV had collected royalties from Mr. Lube for more than a decade, and CEO Sean Morrison explained: “Mr. Lube + Tires is the best franchise business I’ve ever seen.”
Morrison added that he has worked with Canada’s top franchise operators for more than 30 years. Notably, Morrison helped build The Keg and advised Lululemon and Aritzia earlier in his career, so he has a real basis for comparison.
Owning Mr. Lube outright changes DIV’s business in a meaningful way. Management expects the combined business to generate about $58 million of adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) in the 12 months after closing, up from the $34.1 million DIV collected in royalties and fees from Mr. Lube in 2025.
Mr. Lube CEO Pamela Lee told analysts the chain now has 189 locations, with store count growth accelerating to 18 new locations this year, up from a historical pace of about five per year.
She also pointed out that 79% of stores are run by franchisees with more than a decade of experience, a sign the business model is working for the people who actually operate it.
The numbers behind the monthly dividend stock
Management says the acquisition deal is accretive. Distributable cash per share is expected to rise from $0.3128 to $0.3478, an increase of about 11%, according to the presentation. DIV plans to hold its dividend at the current level and use the excess cash flow to pay down debt instead of raising the payout right away.
Pro forma leverage is expected to climb to about 3.5 times senior debt and 4.7 times total debt right after closing, up from roughly 2.5 and 3.5 times before the deal. Chief Financial Officer Greg Gutmanis told analysts the company has a plan to bring total leverage back below four times in the near term.
It is also worth knowing that DIV’s payout ratio was 101.1% in the first quarter of 2026, largely because Mr. Lube sales are seasonally weaker early in the year.
That is not unusual for the business, but it is a number that income investors should watch each quarter.
Should you buy this Canadian dividend stock?
My take is that Diversified Royalty is a reasonable pick for income-focused investors who understand what they are buying. The monthly payout, the 6.4% yield, and the growing exposure to a franchise business with real momentum all make a good case.
The tradeoff is higher debt in the near term and a business that is now more concentrated in one partner, since Mr. Lube will make up around 56% of the pro forma contribution.
For investors comfortable with that concentration, DIV looks like a stock worth owning for the income alone, with some upside if Mr. Lube keeps growing the way management expects.
