Dividend stocks offer investors a great way to earn a high return on investment, much higher than could be achieved by simply putting funds into a bank account. But the big advantage of putting money into a bank account is knowing there will be zero fluctuation and volatility in your balance, which will only increase with any interest that is earned.
Taking on risk could help increase your payouts
For investors willing to take on some risk there are more plentiful options when it comes to dividend stocks, and the yields are much higher as well. The key is of course not taking on too much and exposing yourself to unsustainable payouts.
Below I’ll show you an example of four different stocks that you could invest in and how you could make $500 a month with less than $100,000.
Sienna Senior Living Inc. (TSX:SIA) has tremendous growth opportunities in long-term care and housing as baby boomers continue to retire and as seniors make up more of the population in the years to come.
The stock hasn’t done terribly well this year, declining by 4% year to date, but over the longer term, returns have been over 60% dating back to 2013. I wouldn’t be surprised to see more of the same, if not better, over the next five years.
The stock pays an attractive yield of 5.2%, as it recently increased its dividend payments. If you were to invest $20,000 in Sienna today, you could expect to earn a dividend of around $88 every month.
Pizza Pizza Royalty Corp. (TSX:PZA) is in what I’d consider to be a very stable industry. Pizza has proven to be a very popular menu item for years and is likely going to stay that way for the foreseeable future, and that consistent demand makes it an attractive long-term investment.
Although Pizza Pizza stock had a bit of a decline in the past month as a disappointing earnings result weighed down the share price, I believe it’s likely that the stock will recover and could have a lot of upside from here on out.
However, a welcome side effect of that decline in stock price is that the dividend yield has now grown to 9%, which, given the level of free cash Pizza Pizza has generated over the quarters, may be sustainable.
After all, if the stock recovers in price, the yield will drop back down. But in the meantime, if you were to invest $30,000 in the stock, you would earn an estimated $226 on a monthly basis.
First National Financial Corp. (TSX:FN) is another stock that could see lots of growth opportunities as the economy continues to expand and as interest rates increase. The lending company has been generous with its dividend and last year even issued an extra one to investors.
Currently, the stock pays around 6.4% on an annual basis, and a $25,000 investment in First Financial would add $133 to your portfolio every month.
Gamehost Inc. (TSX:GH) is a good, diversified investment to hold, particularly as the Alberta economy continues to recover. With properties in the oil and gas province, Gamehost is going to be dependent, in large part anyway, on the success of the oil and gas industry.
Gamehost stock currently pays investors just over 6% per year, and if we were to invest $12,000 here, that would add another $60 in monthly dividends. As I felt that Gamehost might be the highest risk of the stocks listed here, I allocated the lowest amount to this investment.
In total, in this sample scenario, you could earn $507 every month by investing a total of $87,000. Below is a summary:
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor David Jagielski has no position in any of the stocks mentioned.