5 TSX stocks to buy with over 8% dividend yield

Highlights

• One of the real estate firms mentioned here posted a 99.5 per cent rent collection rate, and the average occupancy rate was 97 per cent in its latest quarter
• The latest quarter highlighted a 100 per cent rent collection rate from European properties in one of the below companies.
• The highest dividend yield was 19.98 per cent, and ROE was 57.11 per cent among them.

With ever-increasing expenses and cost of living, some investors may prefer to invest in stocks to earn a passive income to beat inflation. Some investors trade in the stock market for long-term investing, while others look for passive income and short-term gains. Also, investors constantly look for stocks that pay dividends regularly, and if these dividends grow, it is an added bonus.

It is also worth noting that one of these dividend-paying stocks posted a year-to-date (YTD) return of close to 29 per cent, whereas the YTD return posted by the S&P/TSX Composite Index was 18.18 per cent. Also, the highest three-year dividend growth rate was 39.51 per cent.

On that note, let us explore stocks with over eight per cent dividend yield.

1. Labrador Iron Ore Royalty Corporation (TSX: LIF)

The Canadian steel corporation earns commission and royalty income from the sale of iron ore. Labrador Iron Ore Royalty also produces iron ore pellets, and these pellets and concentrates have a customer base spread around the world.

On September 17, the dividend yield of Labrador Iron Ore was 19.98 per cent, and the company intends to pay a quarterly dividend of C$ 2.10 per share on October 26. The three-year average dividend growth rate was 39.51 per cent.

The company benefitted from an increase in iron ore and pellets prices in the second quarter of the fiscal year 2021. Hence the total revenue posted by the company was C$ 79.23 million, up from C$ 46.71 million in Q2 FY20.

Over the past year, the stock price of Labrador Iron expanded by close to 59 per cent, and on September 16, it closed at C$ 42.03 apiece.

The steel company posted a return on equity (ROE) of 57.11 per cent, earnings per share (EPS) of 5.13, and return on assets (ROA) of 41.27 per cent on September 17.

2. True North Commercial Real Estate Investment Trust (TSX: TNT.UN)

The strategy and objectives of this real estate investment trust are to acquire commercial real estate properties, thereby maximizing investors' returns. The investors of True North are expecting a monthly dividend of C$ 0.05 to be paid on October 15. The dividend yield was 8.14 per cent on September 17.

The price-to-earning (P/E) ratio of the REIT was 18.7, the ROE was 6.74 per cent, and the ROA of 2.54 per cent on September 17.

The stocks of the REIT traded five per cent below their 52-week high of C$ 7.68 (June 28), which closed at C$ 7.29 on September 16. The one-year stock return was 23 per cent. 

In Q2 FY21, True North Commercial posted a 99.5 per cent rent collection, and the average occupancy rate was 97 per cent. 

Also Read: 5 best TSX dividend stocks to buy this September

3. Global Dividend Growth Split Corp. (TSX:GDV)

The asset management company invests in and holds a portfolio of global dividend-paying large-cap companies. Global Dividend Growth Split Corp held outstanding shares of 9.32 million and a market cap of C$ 117.15 million on September 17.

Global Dividend recently paid a monthly dividend of C$ 0.10 on September 15, and the dividend yield was 9.54 per cent on September 17. On this day, the asset management company held a price-to-book (P/B) ratio of 1.1, EPS of 3.58 and ROE of 25.9 per cent.  

At the end of the day’s trading on September 16, the stocks of the asset management company were priced at C$ 12.57. On a YTD basis, the stock return was close to 20 per cent, and these stocks over the past year returned 31 per cent. 

Also Read: 5 Canadian stocks paying the highest dividend in 2021

4. Inovalis Real Estate Investment Trust (TSX: INO.UN)

The C$ 314.93 million market cap (September 17) REIT focuses on office properties based in Germany and France. These office properties generate rental income, which is leased to corporates located in urban districts.

The REIT is expected to pay a dividend of C$ 0.069 payable on December 15, while its Ex-Div-Date is November 29. The dividend yield was 8.48 per cent and three-year dividend growth rate of 4.32 per cent.

On the valuation front, Inovalis REIT posted a debt-to-equity (D/E) ratio of 0.77, a P/E ratio of 58.5, and an ROE of 2.66 per cent.

Inovalis REIT posted that the rent collection rate from its French assets was 95 per cent, while 100 per cent of rent was collected from its properties based in Germany in Q2 FY21. Its net rental income was C$ 8.1 million in Q2 FY21, down from C$ 9 million in Q2 FY20.

The stock price ended its day’s trading at C$ 9.72 on September 16 which was two per cent less than its 52-week high of C$ 9.96.

5. Chemtrade Logistics Income Fund (TSX: CHE.UN)

The chemical company operates under four segments catering to the chemical requirements for customers based in North America and around the world. These divisions manufacture inorganic coagulants used in the water treatment process, removing sulphuric acid and sodium hydrosulfite, and conduct other processing services.

The management of Chemtrade announced the payment of a monthly dividend of C$ 0.05 per share on September 27. The dividend yield was 8.29 per cent.

The stock price traded close to 78 per cent above its 52-week low of C$ 4.07 (October 28, 2020), closing at C$ 7.23 on September 16. Over the past year, it posted a return of nearly 32 per cent. The stock price only increased by close to eight per cent on a quarter-to-date (QTD) basis.

The chemical company held a market cap of C$ 749.82 million and posted a P/B ratio of 1.31, a D/E ratio of 2.49 (at the time of writing).

Bottom line:

A dividend yield of over and above eight per cent may signal a firm hold of cash balance which negates the uncertainty and liquidity concerns in a difficult period. Many analysts also believe that the consistent issuance of dividends is a positive signal, however, risk still exists.