Most Canadian dividend shares supply a quarterly payout to shareholders. Nonetheless, just a few TSX-listed corporations pay month-to-month dividends, too. This consistency makes budgeting simpler, compounds returns quicker by means of reinvestment, and creates a passive revenue stream that mimics a paycheck.
A $1,000 month-to-month dividend reinvested instantly begins to generate further revenue the following month. Over time, that accelerated compounding creates significant wealth.
Pizza Pizza Royalty (TSX: PZA) exemplifies this method. At $16.59 per share with a $0.078 month-to-month dividend, 1,000 shares generate $78 in month-to-month passive revenue or $936 yearly. That’s a 5.6% yield paid out in 12 installments as a substitute of 4, giving buyers most flexibility to reinvest or spend as wanted.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Pizza Pizza Royalty | $16.59 | 1,000 | $0.078 | $78 | Month-to-month |
How the royalty mannequin works
Pizza Pizza Royalty operates in a different way from conventional restaurant shares. The corporate doesn’t personal or function pizza areas. As a substitute, it collects month-to-month royalty funds from Pizza Pizza Restricted based mostly on system gross sales from eating places within the royalty pool.
CFO Christine D’Sylva defined the construction throughout the Q3 earnings name: “In alternate for using the Pizza Pizza and Pizza 73 emblems in its restaurant operations, Pizza Pizza Restricted pays the partnership a month-to-month royalty as a share of Royalty Pool gross sales.”
That percentage-based mannequin creates a direct hyperlink between restaurant efficiency and dividend funds. As system gross sales develop, royalty revenue will increase, supporting dividend stability and potential hikes.
The royalty pool presently consists of 794 eating places – 694 Pizza Pizza areas and 100 Pizza 73 eating places. That base expanded by 20 eating places on January 1, 2025, offering instant top-line progress.
Q3 outcomes present resilience
Pizza Pizza’s Q3 efficiency demonstrated the enterprise mannequin’s sturdiness throughout financial headwinds. Similar-store gross sales elevated 0.1% for the quarter, with Pizza Pizza areas posting 0.3% progress whereas Pizza 73 declined 1.1%.
COO Philip Goudreau acknowledged the challenges: “We noticed an general lower in transactions as we confronted heightened competitors and we noticed the impression of diminished client spending, primarily earlier within the quarter in July.”
Poor July circumstances affected outside occasions, whereas tourism to Alberta locations akin to Banff declined as a result of fewer U.S. guests. A Canada Put up strike pressured the corporate to skip July flyer distribution, additional pressuring gross sales.
Regardless of headwinds, royalty pool system gross sales rose 2% to $158.8 million, up from $155.8 million 12 months over 12 months. The mixture of recent eating places added to the pool, whereas modest same-store gross sales progress drove royalty revenue up 1.9% to $10.2 million.
Innovation retains prospects coming again
Pizza Pizza isn’t sitting idle whereas ready for financial circumstances to enhance.
- The corporate launched hen tenders at Pizza Pizza and new wing flavours at Pizza 73, capitalizing on rising client curiosity in fried hen objects.
- These additions present stackable particular person choices whereas leveraging the corporate’s “well-known and cherished assortment of dips,” in response to Goudreau.
- Pizza Pizza rolled out visible supply monitoring, just like third-party platforms, to enhance the shopper expertise whereas maintaining orders in-house and driving extra worthwhile natural channel progress.
- One of many quarter’s vivid spots got here from natural supply progress – the second consecutive quarter exhibiting enchancment in that channel.
Third-party supply platforms cost hefty commissions that strain franchisee economics. By bettering its proprietary ordering expertise and integrating third-party options akin to supply monitoring, Pizza Pizza retains extra orders flowing by means of higher-margin channels.
The shift towards pickup continues to speed up. At Pizza 73, pickup combine jumped from 10% traditionally to almost 25% as prospects search for methods to save cash.
Monetary well being helps dividends
The dividend’s sustainability relies on money circulate protection.
Pizza Pizza declared shareholder dividends of $5.7 million for Q3, or $0.2325 per share month-to-month, unchanged from the prior 12 months. The payout ratio hit 111% for the quarter, however the firm targets roughly 100% on an annualized foundation.
Pizza Pizza ended Q3 with 811 complete areas, together with nontraditional items. Whereas progress slowed versus historic ranges, administration expects to speed up conventional community enlargement by 2% to three% for the complete 12 months. Worldwide enlargement in Mexico stays in its early phases, with 4 areas in Guadalajara.
The 5.6% month-to-month yield supplies flexibility to reinvest or complement dwelling bills. The royalty mannequin insulates buyers from operational complications whereas sustaining publicity to top-line progress.