Canadian investors seeking a reliable monthly income stream should consider owning quality monthly dividend stocks.
One such TSX dividend stock is Freehold Royalties (TSX: FRU), which offers a tasty 6.1% yield. Over the last 10 years, FRU stock has returned close to 200% to shareholders, after adjusting for dividend reinvestments. Over the same period, the TSX index returned 235% to shareholders.
Let’s see if Freehold Royalties is still a good dividend stock to buy right now.
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The bull case for Canadian dividend stocks like Freehold Royalties
Freehold does not operate oil wells or spend money drilling them. Instead, it owns mineral rights under land in Canada and the United States and collects a royalty whenever an operator produces oil or gas from that land.
An asset-light business model means Freehold avoids most of the costs that weigh down traditional energy companies. There are no drilling bills, no equipment to maintain, and no cleanup costs when a well runs dry.
This is a big reason Freehold’s cost structure is among the lowest in the industry, with cash costs averaging about $6.50 per barrel of oil equivalent (BOE) in the second quarter, down from $7.02 in the first quarter.
Freehold also spreads its risk across two countries. In the second quarter, 54% of production originated from Canada and 46% from the United States, giving it exposure to different regions, operators, and commodity price environments.
In Q2 2026, Freehold reported royalty and other revenue of $100 million, an increase of 29% year over year, driven by higher oil prices.
Funds from operations (FFO), the cash a company generates, stood at $78 million, or $0.47 per share. In Q2, it paid $44 million to shareholders via dividends, indicating a payout ratio of less than 60%.
Basically, Freehold generated enough cash to pay shareholders a dividend, reinvest in growth, and strengthen the balance sheet.
Speaking of the balance sheet, net debt fell by $24 million during the quarter to $251 million. Its net-debt-to-funds-from-operations ratio sits at just 1 times, which is a conservative level for an energy company.
Freehold also allocated roughly $9 million toward new acquisitions in the quarter and has invested about $29 million so far this year buying mineral rights across Loving, Martin, Midland, and Lea counties in the Permian Basin.
Should you buy Freehold Royalties stock?
Given its low-cost structure, shrinking debt, and a payout ratio well under 60%, Freehold Royalties looks like a well-run business behind its attractive yield. The company is growing cash flow, maintaining a healthy balance sheet, and focusing on accretive acquisitions.
Analysts forecast cash flow per share to expand from $1.43 in 2025 to $1.82 in 2029, which could translate into future dividend hikes.
Freehold continues to develop its asset base through lease and royalty optimization. It aims to acquire royalty assets with long economic life and attractive risk-adjusted returns.
For investors who want reliable monthly income from a Canadian dividend stock without taking on the operational risk of a typical oil and gas producer, Freehold is worth serious consideration.
