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“Getting the most returns with the least work” is the definition of efficiency. When it comes to starting easy income through investing, one way to achieve this efficiency is to invest in high yielding dividend stocks. They can start to generate you a decent income (proportional to the invested capital), and you won’t have to put in any effort.
An energy royalty company
Royalty companies like Freehold royalties (TSX:FRU) gives you exposure to certain asset classes and commodities while protecting you from many of the risks and challenges inherent in the underlying assets/commodities. In the case of Freehold, you essentially get exposure to oil and gas properties in Canada and the United States. The current portfolio consists of 149 Canadian wells and 101 American wells.
The company makes its money by taking a monetary stake in the oil exploration and production operations of companies such as peyto. A significant portion of this money is redirected to investors via dividends.
And while the current return of 6.1% looks quite promising, it is relatively lower compared to the company’s usual return and is the result of a massive growth phase that has driven the company’s market value up. by 112% in the last 12 months.
A mortgage investment company
Timbercreek Financial (TSX:TF) allows you to invest in the mortgage industry. The company, like several other non-bank mortgage lenders, caters to a target audience that the big banks can’t or won’t. In Timbercreek’s case, these are typically residential and commercial property owners or developers seeking short-term structured financing solutions.
If we assess the performance of the stock, Timbercreek can be considered a fairly stable company. Its stock price has hovered around the base price of $9 per share since 2016. Even after the stock market crash, when the stock fell quite hard and partially recovered, the stock returned to normal. The current yield of 7.2% seems more than adequate, but you can do better waiting for another drop.
One of the richest pools of high yielding dividend assets are REITs, and True North Commercial (TSX:TNT.UN) is a good example. This relatively small Commercial REIT is currently offering a mouth-watering yield of 8.2%, and that’s when it’s trading at an 11% discount from its pre-pandemic peak. You can get a much higher double-digit return by buying the dip.
And this high yield is accompanied by a very attractive valuation and a payout ratio which may seem uncertain (103%). Still, it’s relatively stable given this REIT’s history of payout ratios. It has a geographically diverse portfolio of office properties, although the highest concentration is naturally in Ontario.
Creating passive income to supplement primary income is one of the main reasons why many people learn to invest. While not aristocratic, all three dividend stocks offer a decent combination of dividend security and high yield, making them ideal picks for easy income.