This 7% Dividend Stock Pays Out Every Month Like Clockwork

A perfect high-yield monthly dividend stock has to earn the payout in a way that feels boring. You want cash flow that can handle bad weeks in the oil market, a balance sheet that does not wobble when rates or prices move, and a distribution policy that management treats like a long-term promise, not a marketing line. The best ones also keep the business simple, so you can understand exactly where the dividend comes from when the share price gets choppy. So let’s look at one to watch.

FRU

Freehold Royalties (TSX:FRU) fits the “paid to wait” theme as it doesn’t drill wells. It owns royalty interests on oil and gas lands and collects a slice of production revenue from operators. That structure matters because the operator pays the capital costs, not Freehold. Freehold’s job is to manage its land base, add royalties through acquisitions, and keep costs lean, so more revenue can drop to cash flow.

The monthly dividend is the headline for a reason. The board declared a January 2026 dividend of $0.09 per share, paid on February 17, 2026, which keeps the monthly pattern intact. At recent prices, that payout works out to a yield that sits right around 7%, which is exactly the kind of number that can make a TFSA feel like it has a little heartbeat.

Performance over time shows why income investors keep circling back. The current 52-week range sits at $10.53 to $15.97, and it shows a one-year return a little above 30% as of writing. The dividend stock also traded around the mid-$14 to mid-$15 range in the first week of January, which tells you the market has warmed up to the story again after a tougher stretch earlier in the cycle.

Into earnings

Now for the earnings proof. In the third quarter of 2025, Freehold reported $74 million in revenue and $59 million in funds from operations, or $0.36 per share. It paid $44 million in dividends in that quarter, or $0.27 per share. Production averaged 16,054 barrels of oil equivalent per day (boe/d), up 10% from the year before, with liquids at 65% of volumes.

Those numbers show a clean dividend engine: steady royalty revenue plus disciplined spending. They also highlight the real trade-off. Freehold’s cash flow still depends on commodity prices and drilling activity on its lands. When prices fall hard, cash flow falls too. That does not automatically break the dividend, but it raises the pressure and it can limit how aggressive Freehold can be with acquisitions or buybacks.

The outlook and valuation angle comes down to discipline. Freehold’s investor materials emphasize a target dividend payout ratio of about 60% and a goal to keep net debt below 1.5 times net debt-to-funds from operations. The payout ratio can look high on an earnings basis, which is a reminder to focus on cash measures like funds from operations for this kind of business. The big catalyst in 2026 is simple: if oil stays supportive and operators keep drilling longer, more productive wells on its lands, Freehold can grow royalty volumes without funding the drill bit.

Bottom line

So could FRU be an ideal monthly dividend stock to buy? Certainly, as it has a straightforward model, it just reaffirmed the monthly $0.09 dividend into early 2026, and its structure can produce high-margin cash flow when energy markets behave. And right now, here’s what a $7,000 investment could bring in.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTFRU$15.91439$1.08$474.12Monthly$6,984.49

The honest caveat is also simple: it will not pay “like clockwork” if commodities enter a long slump. But if you want a monthly payer with a business model designed for cash returns, Freehold looks like the kind of dividend stock you can buy, reinvest, and let time do the heavy lifting.

The post This 7% Dividend Stock Pays Out Every Month Like Clockwork appeared first on The Motley Fool Canada.

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More reading

• 3 Canadian Stocks That Paid Record Dividends in 2025
• 3 Reasons I’m Never Selling This Dividend Stock
• 3 High-Yield Dividend Stocks Perfect for TFSA Contributions in 2026
• Why January Loves Risk: 2 Small-Cap TSX Stocks to Watch in Early 2026
• This Monthly Dividend Stock Could Make January Feel Like Payday Season

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Freehold Royalties. The Motley Fool has a disclosure policy.