I offer greets to the conquistador!
First I would like to ask how big your army is, as army size tends to have a large effect on Morale. You have already mentioned that you are paying wages and have enough food, so I would only remind that multiable food types have a positive effect on morale. Finally, assaulting your own troops native lands makes them sad and unhappy.
They, of course, do not see themselves as liberators of their homelands, no, they become unhappy at the liberation of the peasants and goods by ransack of their pitiful homes. Peasants these days, psh.