Written by Daniel Da Costa at The Motley Fool Canada
Earning passive income has a tonne of benefits, particularly if you’re doing it in a registered account like a TFSA. Earning cash consistently from TSX dividend stocks, for example, helps to reduce your investment risk. You can put the cash back to work and help to compound your capital even faster.
And in today’s environment, investors have an excellent opportunity to find many attractive dividend stocks with compelling yields. Because as stocks sell-off, the dividend yield that they offer increases as a result.
So with the market selling off throughout the year, many TSX dividend stocks continue to get more attractive by the day.
Therefore, if you’re a dividend investor or just looking to boost the passive income that your portfolio generates, here are three of the best TSX dividend stocks to buy now.
A top Canadian energy stock
As energy stocks have pulled back over the last few months, investors have plenty of attractive stocks to buy now. If you’re looking to buy TSX dividend stocks, though, I’d recommend Freehold Royalties (TSX:FRU).
Freehold is an excellent dividend stock because it’s constantly bringing in tonnes of cash flow. The stock collects a royalty from other energy companies that use its land to produce energy. Therefore, it has no maintenance expenses and few costs.
Instead, Freehold is constantly bringing in cash, which it’s using to either fund the dividend or save up to invest in acquiring more land.
Therefore, the royalty oil and gas company is one of the generous stocks you can buy. Its ultra-safe dividend offers a yield of roughly 8.3% and the company is expected to payout just 50% of the free cash flow that it will earn next year.
And with the long-term potential Freehold has to continue acquiring more land, specifically south of the border, it’s certainly one of the best TSX dividend stocks to buy today.
One of the few TSX dividend stocks with a yield above 10%
Earlier this month, Corus Entertainment (TSX:CJR.B) warned investors that advertising demand was slowing as the economic situation worsens in North America. However, while this was already to be expected, the stock sold off significantly.
So now, with Corus trading below $2.40 a share, the $0.24 in annual dividend payments means that its yield is now above 10%.
Corus’ business is seeing an impact from the current environment. Yet the stock is highly unlikely to be severely impacted enough that its dividend will have to be trimmed.
For example, over the last 12 months, Corus has earned $0.68 in normalized earnings per share (EPS). Therefore, its payout ratio has been just 35%. And in 2023, its EPS is expected to fall to roughly $0.55, disappointing for the company but nowhere near a level at which the dividend would be under threat.
In addition, while sales and EPS are expected to fall this year and next, Corus is still expected to earn over $225 million in free cash flow in fiscal 2022 and over $200 million in 2023. Meanwhile, the company pays less than $50 million to fund the dividend for an entire year.
So if you’re looking for TSX dividend stocks to buy now, Corus is one that I recently bought on the dip.
A top Canadian royalty stock
Lastly, another excellent TSX dividend stock and one of the most-enticing stocks to buy for passive income is Pizza Pizza Royalty (TSX:PZA).
Pizza Pizza is a great stock because it’s specifically made for dividend investors. It has a simple business model whereby it collects a royalty from all sales across the hundreds of restaurants in its royalty pool.
In addition, Pizza Pizza aims to pay out almost all of its cash back to investors, which is why it’s one of the best TSX dividend stocks to buy for passive income.
It does have some risk, though, since the pizza franchise keeps its payout ratio near 100%. So if the business was to be impacted by a recession, for example, that dividend could be at risk.
However, it’s worth noting that Pizza Pizza has done a fantastic job at finding new ways to grow sales over the long haul.
Therefore, if you’re looking for top TSX dividend stocks to buy now, Pizza Pizza currently offers a yield of 6.4%.
Before you consider Corus Entertainment, you'll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in September 2022 ... and Corus Entertainment wasn't on the list.
The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 21 percentage points. And right now, they think there are 5 stocks that are better buys.
See the 5 Stocks * Returns as of 9/14/22
Fool contributor Daniel Da Costa has positions in CORUS ENTERTAINMENT INC., CL.B, NV and FREEHOLD ROYALTIES LTD. The Motley Fool recommends FREEHOLD ROYALTIES LTD. The Motley Fool has a disclosure policy.