Got $1,000? Now's the Time to Create $66 in Passive Income

Got $1,000? Now’s the Time to Create $66 in Passive Income

Passive income is an essential right now, but you can also get growth from this strong stock, even during a market correction.

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published June 23, 2022 3:15 pm EDT

| More on: VITL.UN

Motley Fool investors may be looking at the market right now in complete shock. I know I have been. And that’s even with the knowledge that these downturns are totally and completely normal. It happens about once a decade, and it will continue to happen for decades more.

That’s why passive income can be such a necessity coupled with long-term holding. And it’s why now is a great time to get into the market, even during a correction. You can buy a passive-income stock on the cheap, and see it grow for decades.

So, even if you only have $1,000 to invest, I truly believe you can make a killing in passive income with this one stock.

NorthWest Healthcare

First, let’s look at the passive-income stock I’m recommending for Motley Fool investors. NorthWest Healthcare Properties REIT (TSX:NWH.UN) is a healthcare real estate investment trust (REIT). It acquires and create healthcare properties around the world through a diverse range of assets. These assets include hospitals and healthcare facilities, but also office buildings and parking garages.

Investors saw its worth during the pandemic, as the company continued to grow on the back of being an essential service. On top of this, it saw an increase in lease renewals with all the low interest rates. Even now, it boasts an average lease agreement of 14.6 years! You simply do not see that from most REITs.

That makes its status as a passive-income stock completely stable. It’s simply not affected by what’s going on right now, thanks to these long-term contracts creating steady income. And that income is high at 6.55% as of writing.

Adding it up

Now, there are a few things to consider from NorthWest stock — especially as a passive-income stock. The company is new, coming on the market during the last decade. In that time it hasn’t grown its dividend at all. That’s not to say it will never grow, but it’s definitely something to keep in mind and not put into any of your calculations.

Even still, at such a high dividend, it definitely makes it a strong purchase, even for the next decade or so, if only for passive income — especially at these prices. Shares are currently down 12% year to date, and up 12% in the last five years. That’s a compound annual growth rate (CAGR) of 2.54%, even taking into consideration today’s market correction.

Now, let’s say you take that $1,000 and put it towards NorthWest. If you were to hold that stock and continue reinvesting dividends at these rates, that alone would double your investment to $2,311! Furthermore, you would immediately have 82 shares. That would bring in immediate passive income of $66 each year. But by the time you reach a decade, you’ll have 142 shares. That will bring in passive income of $113.

Bottom line

The numbers here are not drastic. You’re not adding more of an investment, but you’re also not putting down a huge chunk of cash that you can’t afford right now. So, instead, you’re looking forward to stable passive income. That’s may even be all Motley Fool investors want during today’s market correction.