Earn $500 a Month With These Dividend Stocks

If you’ve got some savings down your belt, investing in dividend stocks is one of the quickest ways to set up a $500/month income stream.

| More on:
Payday ringed on a calendar

Image source: Getty Images

The quickest way to set up a $500-per-month income stream is through dividend stocks that provide juicy and safe yields. Here are some high-yield dividend stocks on the Canadian Dividend Aristocrat list that appear to offer sustainable dividends. These names fit in with Larry Berman’s thoughts this month: “in an inflationary environment, value [stocks] will outperform growth [stocks].”

Recall that Canadian Dividend Aristocrats are stocks that have increased their dividends for at least five consecutive years.

Manulife stock

Manulife (TSX:MFC)(NYSE:MFC) is a cheap dividend stock yielding an awesome 5.5% yield. It trades at a price-to-earnings ratio of about 7.4, while it has potential to increase earnings at a rate of about 8% over the next three to five years. At this writing, at $23.89 per share, the analyst consensus price target suggests 28% upside potential over the next 12 months.

Here’s some commentary on the dividend stock from analysts that appeared on BNN last week.

“Manulife just raised its dividend by 18%. It’s growing its business in North America and China. They have a dividend that pays over 5%. 80% of its business on the asset basis is based on fixed income. If we see rising rates, this is definitely going to be a company that will benefit from that. I like Manulife at this time. “

Brooke Thackray, research analyst at Horizons ETF Management Canada

This analyst has a theory as to why Manulife appears to be undervalued compared to its peers.

Manulife is potentially undervalued because of its China exposure. The Chinese stock market has been one of the worst-performing asset classes this year, which is surprising given they have no COVID cases according to the official statistics and given they’re doing so much better than the rest of the world. Historically, it’s a very good way to play rising interest rates because their future liabilities are discounted based on current interest rates. And if current interest rates are very low, the present value of those future liabilities is actually quite high. But as rates rise, those future liabilities decline in present value.”

Brendan Caldwell, president and CEO, Caldwell Investment Management

SmartCentres REIT

SmartCentres REIT (TSX:SRU.UN) is a retail real estate investment trust that pays a monthly cash distribution yielding 5.8%, which income investors may be interested in. The REIT has a five-year dividend-growth rate of 2.8%.

An analyst commented on SmartCentres in November 2021.

“SmartCentres is primarily anchored by Walmart. That’s a positive attribute. The drawback of such a great anchor is low rent growth. This is not necessarily a bad thing as it provides an attractive distribution yield. In our minds, that distribution yield is quite safe. The flip side is, today, we’re looking at an environment where we value growth. We have inflation on the horizon and where real estate benefits from inflation is it can capture rent growth. SmartCentres trades at its net asset value and has one of the lowest growth rates among its retail peers. If you own it today, continue to hold it. It is safe. For us, at Vision, we’re total return investors, and so, … we’re always looking to [for] something cheaper on the stock market … and generate the bulk of our returns from capital gains.”

Andrew Moffs, senior vice president and portfolio manager at Vision Capital

Bottom line

Between the two dividend stocks, investors can get an average yield of about 5.65%. To get $500 a month across these dividend stocks, you would need to invest about $53,097 in each stock.

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.

The Motley Fool recommends Smart REIT. Fool contributor Kay Ng owns shares of Manulife.

More on Dividend Stocks

Glass piggy bank
Dividend Stocks

How to Accelerate Your TFSA Returns From Dividend Stocks

The stock market saw a correction in January, as investors booked profits ahead of the central bank’s interest rate hikes. The TSX …

Read more »

money cash dividends
Dividend Stocks

Top 3 Dividend Stocks in Canada for 2022

Canada is home to some of the best dividend stocks in the world. With finance, telecoms, and energy dominating the …

Read more »

calculate and analyze stock
Dividend Stocks

2 Top TSX Stocks to Put on Your TFSA Buy List

TFSA investors are searching for undervalued TSX stocks to buy that have the potential to deliver big gains in 2022. …

Read more »

Payday ringed on a calendar
Dividend Stocks

Get Unbelievable Monthly Income With High-Yield Dividend Stocks

The only thing better than a dividend stock is a stock that pays dividends every month. For people who live …

Read more »

gas station, convenience store, gas pumps
Dividend Stocks

1 Key Catalyst Investors in Couche-Tard Stock Need to Watch

One of the top value stocks on the TSX, Alimentation Couche-Tard (TSX:ATD) has been a strong performer over the past year. …

Read more »

Value for money
Dividend Stocks

2 Top Value Stocks I’m Looking to Buy Right Now

Value investing is a lot more than just grabbing stocks that look inexpensive. The shares of an organization in permanent …

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

RRSP Investors: 2 Top Canadian Dividend Stocks to Buy for Total Returns

Canadian savers are searching for good TSX stocks to buy inside their self-directed RRSP that pay reliable dividends and can …

Read more »

Cogs turning against each other
Dividend Stocks

2 Dividend Stocks That Could Stabilize Your TFSA During a Market Correction

A common strategy for investing during a market downturn is to allocate a greater proportion of your portfolio towards dividend …

Read more »