Passive Income: 1 Easy Way to Make $850 Per Month in 2021

Canadians can invest in dividend stocks to earn passive and recurring income after the government’s temporary benefits expire. A high-yield dividend aristocrat like the Keyera stock is an attractive monthly income stock.

| More on:
A close up image of Canadian $20 Dollar bills

Image source: Getty Images

The last time the world faced a crisis of a similar magnitude to the COVID-19 pandemic was in 2008-2009. Canada responded promptly to support workers and businesses in the wake of severe financial hardships. However, the emergency and recovery benefits are all temporary and relief for the short-term.

Many recipients of the various income support programs are saving instead of spending their pandemic money. According to Statistic Canada, the country’s household saving rate is growing. In Q3 2020, the rate was 14.6%, which is still high and comparable to the early 90s level.

Canadians looking to put their money to good use can consider one simple strategy. Investing in a high-yield dividend stock can generate $850 per month to add to your household’s savings or disposable income.

Generous income stock

Keyera (TSX:KEY) is the go-to dividend stock of income investors whose risk appetites are moderate to high. The energy stock pays an over-the-top 7.99% dividend. Since it’s also a monthly income stock, an investment of $127,700 will produce $850.27 passive income per month.

Last year, Keyera investors lost by 27.8%, although the management didn’t slash dividends. However, the energy sector is outperforming the general market (+2.99% versus +1.49%) and seven other sectors thus far in 2021. Meanwhile, Keyera’s year-to-date gain is 9.3%. Analysts forecast the price to climb 26.2% to $31 in the next 12 months.

Optimistic oil and gas industry outlook

Deloitte Canada expects higher demand for crude to return in 2021 after the challenges of 2020. It adds that supplies will decrease over the first quarter because of the winter months. According to Andrew Botterill from Deloitte Canada, oil and gas companies must work to understand how markets are changing because of the pandemic to stay competitive.

The outlook by the Canadian Association of Petroleum Producers is no longer gloomy. It sees capital spending to rise by $3.36 billion from $23.94 billion in 2020. The Petroleum Services Association of Canada (PSAC) share the same optimism as it forecast the number of wells drilled across the country to increase by 75 to 3,350 in 2021.

Elizabeth Aquin, the PSAC interim CEO, said oilfield services companies survived the prolonged downturn due to federal government programs such as the Canada Emergency Wage Subsidy (CEWS). The $1.7-billion abandoned well cleanup program helped too.

Investment thesis

Keyera’s integrated midstream business gives it a competitive advantage. Along with the full range of essential midstream services, a high proportion of its broad customer base consists of investment-grade counterparties.

Management’s goal is to strengthen Keyera’s industry-leading position. The business outlook is encouraging as the capital program focuses on investments that support future growth. The completion of two projects (Wapiti gas plant and the Wildhorse terminal) over the next three years will extend the company’s secured growth into 2022.

Keyera is also heavily favoured by long-term investors because of its dividend aristocrat status. The energy stock has a long history of steady dividend growth that dates back to its 2003 Initial Public Offering (IPO). The dividend growth rate over the last five years is an impressive 8.9%.

Choose the right investments

Historically, the stock market still experiences ups and downs. Today, Canada is in a recession, and the COVID-19 pandemic could still shake the market. However, you could still earn passive income provided you choose the right investments or Dividend Aristocrats, for that matter.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends KEYERA CORP.

More on Dividend Stocks

Hand arranging wood block stacking as step stair with arrow up.
Dividend Stocks

1 Growth Stock With Legit Potential to Outperform the Market

Identifying the stocks that have outperformed the market (in the past) is relatively easy, but selecting the ones that will…

Read more »

money cash dividends
Dividend Stocks

Passive Income: The Investment Needed to Yield $1,000 Per Annum

Do you want to generate a juicy passive-income stream? Here's a trio of stocks that can generate a yield of…

Read more »

Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks
Dividend Stocks

Invest $10,000 in This Dividend Stock for $1,500.50 in Passive Income

If you have $10,000 to invest, then you likely want a core asset you can set and forget. Which is…

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

Here’s the Average TFSA Balance in 2024

The average TFSA balance has steadily risen over the last six years and surpassed $41,510 in 2023. Will the TFSA…

Read more »

potted green plant grows up in arrow shape
Dividend Stocks

TFSA Set and Forget: 2 Dividend-Growth Superstars for the Long Run

I'd look to buy and forget CN Rail (TSX:CNR) and another Canadian dividend-growth sensation for decades at a time.

Read more »

Caution, careful
Dividend Stocks

Here’s Why I Wouldn’t Touch This TSX Stock With a 50-Foot Pole

This TSX stock has seen shares rise higher, with demand for oil increasing, and yet the company could be in…

Read more »

Payday ringed on a calendar
Dividend Stocks

1 Passive-Income Stream and 1 Dividend Stock for $781.48 in Monthly Cash

Looking for passive income? Don't take out a loan with that high interest involved. Instead, consider this method for years…

Read more »

money cash dividends
Dividend Stocks

Pizza Stocks Are Actually Great for Passive Income: Who Knew?!

Pizza Pizza Royalty (TSX:PZA) may very well be the best inflation-fighting food stock out there on the TSX.

Read more »