Dividend Deal: Make $527 in Monthly Passive Income

If passive dividend income is what you need right now, Pembina Pipeline Ltd. (TSX:PPL)(NYSE:PBA) gives you the best chance both now and decades into the future.

| More on:
Growth from coins

Image source: Getty Images

If there’s one thing Canadians need right now, it’s money. While it’s deceptively simple to say you should be investing in hopes that your investment will bring in cash in a year or so, it doesn’t really help you right now.

In fact, three out of five Canadians right now are struggling financially due to the pandemic and market crash. This means dividends are being seen as the best defensive tool in this insane world we’re living in.

Dividends can bring in cash every year, quarter or even every month. That cash can be set aside for a rainy day, but if you’re one of those 57% of Canadians needing the money, those dividends can also be used for your family.

Groceries, healthcare products, bills, mortgage payments, all of these items need to be paid for. This makes dividends your best friend right now.

But before you go searching for a list of high dividend yields, a word of warning. You want a stock that can keep up payments, as well as one that has a strong future ahead. Those dividends are paid out by the company — one that needs to keep bringing in cash so it can support your dividend payments.

That’s why today I’m highly recommending investors look into Pembina Pipeline Ltd. (TSX:PPL)(NYSE:PBA).

A dividend king

Pembina is ideal for investors looking for a high-quality stock with killer dividends to boot. The company currently offers a whopping 8.82% dividend yield of $2.52 per share per year. But the kicker is that dividend is given out each month, coming out to $0.21 per share per month.

While that might seem like small potatoes, let’s take a look at some other numbers. First of all, the company has grown its dividend yield by 96% in the last decade, which comes out to an average of to 9.6% per year. That’s a solid timeline of stable payments and increases for investors to sink their teach into.

A bright future

It takes more than today’s numbers to keep a company going, which is why I’m recommending this as a great long-term hold as well. Pembina is a pipeline company that has been unfairly bogged down by the oil and gas crisis along with the market crash. While the stock is down 94% as of writing from its peak performance this year, investors are missing a key element here.

Pipelines ship oil; the companies don’t produce it, which means that pipelines are the solution to the current problem of the oil glut, not the problem. Pembina alone has $5.6 billion in secured expansion projects for its own pipelines. Once complete, investors an expect these stock prices to soar.

Meanwhile, the company is stabilized by long-term contracts that will keep cash coming in for decades. That keeps your dividend investment completely secure now and decades from now.

Monthly income awaits

Let’s say you were to use your Tax-Free Savings Account (TFSA) contribution room of $69,500 towars Pembina. That would bring in 2,513 shares, meaning you could bring in $6,332.76 of annual income just from dividends alone! That comes out to $527.73 each and every month.

Even better, if analysts are right, then that investment could become $85,442 when it reaches fair value, and $155,806 in only a year’s time.

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 Amy Legate-Wolfe owns shares of PEMBINA PIPELINE CORPORATION. The Motley Fool recommends PEMBINA PIPELINE CORPORATION.

More on Dividend Stocks

A plant grows from coins.
Dividend Stocks

2 Young TSX Stocks You’ll Be Glad You Bought in 10 Years

Youth means nothing when you plan to hold strong companies long term. These two TSX stocks should therefore be first…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

Is it a Trap? 3 TSX Stocks With Ultra-High Dividend Yields 

Who doesn’t love dividends? But the high-interest rate environment makes ultra-high dividends unsustainable. Are these stocks a value trap?

Read more »

Value for money
Dividend Stocks

3 Value Stocks for Superior Returns in 2023

Given their solid underlying businesses, stable cash flows, high dividend yields, and attractive valuations, these three undervalued TSX stocks could…

Read more »

Financial technology concept.
Dividend Stocks

2 TSX Value Stocks to Buy for Peace of Mind (and a Crazy-Good Deal)

2 TSX stocks that could outperform in the long term.

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

2 of the Best Canadian Dividend Stocks I’d Buy Before March 2023 Ends

Here are two of the best Canadian dividend stocks you can buy on a dip in March 2023 to hold…

Read more »

Double exposure of a businessman and stairs - Business Success Concept
Dividend Stocks

3 Value Stocks That Smart Investors Should Seriously Consider

You get it all with these stable stocks. They may have less growth now, but will have incredibly high growth…

Read more »

Chalk outline of two arrows pointing in opposite directions
Dividend Stocks

2 TSX Stocks I’d Buy Instead of Sitting on Cash

These two TSX stocks are my top choices if you want companies that are going to recover quickly after a…

Read more »

Canadian Dollars
Dividend Stocks

Want $1,000 Per Quarter in Passive Income? 2 TSX Stocks That Do the Job

Are you looking to earn $1,000 in passive income each quarter? These two TSX dividend stocks can help you achieve…

Read more »