1 Ultra-Safe, Passive-Income Stock I’d Buy Right Now

The downturn on the TSX today makes it the perfect time to pick up this passive-income stock and hold on for years of monthly income.

| More on:
protect, safe, trust

Image source: Getty Images

Don’t be tricked, Motley Fool readers. Despite the TSX today continuing to climb 4% in the last two weeks, the index is still down by about 10% year to date. And economists aren’t optimistic the economy will make a sudden turn for the better.

At this time, it’s a great idea to find passive income stocks — but not just any passive-income stock. You need to find a company that’s valuable on the TSX today and due to climb in the years to come. Find a company that has a solid path to profitability and that will pay you in dividends while you wait.

Here’s the one I would consider buying right now.

Granite REIT

Granite REIT (TSX:GRT.UN) is a solid option for those seeking long-term growth. The company saw its share price climb in the last few years thanks to its connection to the e-commerce industry. The real estate investment trust (REIT) focuses on the development and acquisition of industrial properties. This includes everything from storage and warehouses to assembly and shipping.

But shares have also come down due to this connection to e-commerce. And that’s what makes the stock valuable today. Because, honestly, Granite isn’t suffering. Second-quarter earnings are around the corner. But during its first-quarter earnings report, Granite reported a 12% year-over-year increase in net operating income. Further, its adjusted funds from operations rose by 20.4%, with the company closing $193.6 million in acquisitions

This is all thanks to a global portfolio within an easy-to-manage industry. So, yes, shares are down 24% year to date, but they trade at 3.32 times earnings, making it an incredibly valuable stock to jump in on.

How much passive income are we talking here?

Granite has been around as a passive-income stock for over a decade, so you can look back at a fair amount of time to see its historical movements. For its share price, the company has grown 226% in the last decade. That includes the drop on the TSX today. Even still, that comes to a compound annual growth rate (CAGR) of 13.16% as of writing.

Then there’s the dividend to consider. Right now, Granite offers a dividend yield of 3.86%. That comes to a dividend of $3.10 per share annually, which is quite high for an REIT. That dividend has grown at a CAGR of 11.25% in the last decade as well.

If you were to base your growth on this past historical performance, here’s what you could get. Let’s say you make $60,000 and can afford to put $10 aside for investing. That’s $6,000 you can put towards Granite, as an example. Based on past performance, if you were to put aside $6,000 and see it grow for the next decade, you could have a passive-income portfolio worth $160,792!

Or let’s say you want to invest this $6,000 just this year and leave it alone, reinvesting just the monthly passive income. That passive income alone would be $235 annually. In this case, you could have a portfolio worth $29,251 in a decade! In any scenario, this is an ultra-safe, passive-income stock that’s a steal on the TSX today.

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 has no position in any of the stocks mentioned. The Motley Fool recommends GRANITE REAL ESTATE INVESTMENT TRUST.

More on Dividend Stocks

edit U-turn
Dividend Stocks

Down 11% From its 52-Week High, Can goeasy Stock Turn Things Around?

Investors looking for value should be drooling at goeasy (TSX:GSY) stock. With a higher dividend and more room to run,…

Read more »

calculate and analyze stock
Dividend Stocks

Sun Life Stock Is Paying $3.24 Per Share in Dividends: Time to Buy the Stock?

Sun Life (TSX:SLF) stock recently bumped its dividend upwards by 4%, creating even more value for investors today.

Read more »

A Canada Pension Plan Statement of Contributions with a 100 dollar banknote and dollar coins.
Dividend Stocks

Retirees: Here’s How to Boost Your CPP Pension

If you hold dividend stocks like Fortis Inc (TSX:FTS) in a TFSA, you'll take home more income than if you'd…

Read more »

A worker gives a business presentation.
Dividend Stocks

3 Safe Dividend Stocks to Own for the Next 10 Years

Given their consistent performances, healthy growth prospects and solid cash flows, these three dividend stocks are excellent buys for the…

Read more »

A bull outlined against a field
Dividend Stocks

The Bullish Market Left These 3 Stocks Behind, But They’re Buys Right Now

The bullish market left Air Canada (TSX:AC) stock behind.

Read more »

grow money, wealth build
Dividend Stocks

2 Ultra-High-Yield Stocks to Buy Hand Over Fist and 1 to Avoid

I have identified two ultra-high-yield stocks that have fallen to their lows despite strong fundamentals because of sector weakness.

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

3 Stocks Under $50 New Investors Can Confidently Buy

Investors looking for strong stocks can be a bit overwhelmed with options. Which is why today we're looking at these…

Read more »

Golden crown on a red velvet background
Dividend Stocks

Cash Kings: 3 TSX Stocks That Pay Monthly

These monthly dividend stocks offer steady and predictable income and high yields, making them attractive to investors seeking regular cash…

Read more »