If you like getting paid every single month instead of waiting three months for a dividend cheque, Diversified Royalty (TSX:DIV) deserves a spot on your watch list. The monthly dividend stock pays out cash every month and offers you a yield of 7% in August 2026.
Source: Getty Images
Why Diversified Royalty is a quality monthly dividend stock
Diversified Royalty is a multi-royalty corporation. It acquires rights to royalty streams from established Canadian franchise brands rather than running day-to-day operations itself.
Its portfolio includes names most Canadians recognize: Mr. Lube, Sutton, Mr. Mikes, Nurse Next Door, Oxford Learning Centres, Stratus, BarBurrito, Cheba Hut, and AIR MILES.
Each partner pays DIV a royalty based on system sales, and DIV distributes the majority of the cash to shareholders as dividends. The company currently pays $0.024 per share every month, which works out to $0.285 per share annualized.
Diversified Royalty recently announced the acquisition of the Mr. Lube and Tires franchisor business. CEO Sean Morrison called it the best franchise business he has seen in more than 30 years of working with multi-location companies.
DIV closed the acquisition in June for $227.9 million. The deal was funded with $212 million of new senior debt, $34 million of cash on hand, and rolled equity from Mr. Lube management and its other shareholders.
Management expects the combined business to generate roughly $58.7 million of adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) in the 12 months following closing. Comparatively, Mr. Lube generated $34.1 million in royalties for DIV stock in 2025.
On the call, Morrison explained, “The prospects for the business are so spectacular, owning the business is much better.”
He also noted that Mr. Lube’s same-store sales growth averaged 7.25% annually over the past decade, while adjusted EBITDA grew at a 14.7% compound rate over the same period.
DIV expects the deal to push distributable cash per share from $0.3128 to $0.3478, an increase of about 11%. Importantly, management kept the dividend unchanged and said the extra cash flow will go toward paying down debt.
A steady performance in Q2
In the second quarter (Q2) of 2026, Diversified Royalty reported revenue of $21.7 million, an increase of 21.5% year over year.
However, same-store sales growth across the entire Mr. Lube and Tires system slowed sharply, coming in at just 1.2% in the quarter compared with 12.4% a year earlier. Management attributed the slowdown to economic uncertainty and higher gas prices as near-term headwinds.
Net income also fell, dropping to $3.1 million from $9.0 million a year ago. Part of the net income loss was tied to a $7.2 million non-cash impairment charge tied to its Sutton real estate brokerage business, where DIV and Sutton are working through a change to a variable royalty structure.
DIV expects that change to close by the end of the third quarter of 2026.
The payout ratio also climbed to 93.7% in the quarter, up from 84.7% a year earlier, since dividends grew faster than distributable cash per share.
How much should you invest in this dividend stock to earn $250 per month
With DIV trading around $4.11 per share and paying $0.024 per share monthly, an investor would need 10,417 shares to collect $250 every month. At today’s price, that works out to roughly $42,813 invested.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Diversified Royalty | $4.11 | 10,417 | $0.024 | $250 | Monthly |
It is a sizeable investment, and Canadians should consider diversifying the dividend portfolio by adding quality stocks with monthly payouts.
DIV combines a rare mix for Canadian dividend stocks: a monthly payout near 7% and an enticing growth story now that it owns Mr. Lube. Over the last five years, the Canadian dividend stock has returned 119% to shareholders, after adjusting for reinvestments.
The debt load from the acquisition and the slowdown in Mr. Lube’s same-store sales growth are risks you need to watch. But management has laid out a clear plan to de-lever, and it has already used part of a July equity raise to pay down its acquisition facility.
For income-focused investors who can tolerate some near-term leverage, I see DIV as a worthwhile monthly dividend stock to consider building a position in over time.
