One of the biggest misconceptions about dividend investing is that you need hundreds of thousands of dollars to start generating meaningful passive income. While a larger portfolio could certainly produce bigger payments, even a small investment can become a useful source of recurring cash flow.
So even if you invest $10,000 into a Canadian dividend stock on the TSX today, you can expect to receive handsome extra income every year without having to sell any shares. And when those payments arrive monthly, managing your investment income could become even more convenient.
Let’s take a closer look at one top Canadian monthly dividend stock offering a solid yield that could turn a $10,000 investment into about $660 in yearly passive income.
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A top dividend stock to earn passive income in Canada
That stock is Freehold Royalties (TSX: FRU), whose 6.6% annualized dividend yield could turn a $10,000 investment into roughly $660 in annual passive income.
This Calgary-based energy royalty firm mainly earns revenue from oil and natural gas production across Canada and the United States. Its diversified portfolio includes royalty interests in several major North American energy-producing regions, including the Permian Basin.
FRU stock has gained 15% over the last year. It currently trades at $16.45 per share, with a market cap of $2.7 billion.
Strong financial performance supports its dividends
Adding to its investment appeal, Freehold’s financial growth trends suggest that its monthly dividend payouts are backed by improving cash generation. In the September quarter, the company’s royalty and other revenue jumped nearly 35% year-over-year (YoY) to $100 million with the help of stronger commodity prices. Its average realized petroleum and natural gas price also surged nearly 37% YoY to $66.83 per barrel of oil equivalent.
Interestingly, Freehold achieved this impressive revenue growth despite a nearly 2% YoY decline in its total production to 15,758 barrels of oil equivalent per day.
Higher commodity prices also helped the Canadian energy stock improve its quarterly funds from operations by about 36% YoY.
What’s even more encouraging for dividend investors is that Freehold’s payout ratio improved to 55% in the latest quarter from 75% a year ago. This means the company used a smaller portion of its funds from operations to pay dividends, leaving more cash available for debt repayments and growth investments.
Freehold also reduced its net debt by about 11% YoY in the latest quarter, further strengthening its balance sheet.
Growth opportunities could make Freehold even more attractive
Beyond its improving financials, Freehold’s ongoing expansion plan could support its ability to reward shareholders with steady passive income in the coming years. In November, the company announced an agreement to acquire a 3% royalty interest in Alberta’s West Duvernay region for up to $65 million. Freehold expects this investment could eventually contribute between 5% and 10% of its total Canadian production over the next decade.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | INVESTMENT | DIVIDEND YIELD | YEARLY PAYOUT | DIVIDEND FREQUENCY |
| Freehold Royalties | $16.45 | 608 | $10,000 | 6.6% | $660 | Monthly |
| Prices as of Nov 10, 2026 |
Meanwhile, increasing drilling activity across its existing royalty lands and continued investments in the Permian Basin could further strengthen its long-term production outlook.
Although fluctuations in energy prices could have an impact on Freehold’s earnings, its improving cash generation, declining debt, and expanding royalty portfolio make it an attractive dividend stock to consider right now.
Based on its current yield of 6.6%, a $10,000 investment in Freehold stock today could generate about $660 in annual passive income.
