Want $1,000 in Passive Income Each Month? Buy 9,284 Shares of This TSX Stock

Here’s one of the best TSX dividend stocks that could help you earn $1,000 in monthly passive income.

| More on:
Man data analyze

Image source: Getty Images

No matter how high your monthly income is, having a reliable source of passive income always helps. While most Canadians want to earn monthly passive income, they have trouble figuring out how to go about it. If you don’t know it already, dividend investing in Canada could be one of the easiest and arguably the most flexible way of generating passive income each month.

In this article, I’ll give an example of how you can earn $1,000 in monthly passive income by investing in a single TSX dividend stock.

Earn $1,000 in monthly passive income with this TSX stock

When considering investing in dividend stocks on the Toronto Stock Exchange, particularly for the purpose of generating passive income each month, it’s important to select a stock with healthy financial growth trends. It’s equally important to consider its future growth potential, as most market participants prefer to invest in stocks with a strong fundamental growth outlook, which helps such stocks inch up.

Simply put, it may be wise to stay away from a dividend stock with weak future growth prospects, even if its historical financial growth trends look amazing. In addition, you may always want to stick to Foolish investing philosophy by taking the long-term approach. This way, you can ignore short-term market noise to only focus on the long term, making dividend investing much simpler and a lot more rewarding. Keeping all these basic principles in mind, Peyto Exploration & Development (TSX:PEY) could be a good monthly dividend stock to consider right now.

This Calgary-based natural gas-focused energy company currently has a market cap of $2.4 billion, as its stock continues to outperform the broader market by a huge margin. On a year-to-date basis, this TSX dividend stock has surged by 47.7% to trade at $13.67 per share against TSX Composite’s 5.7% losses in 2022. At the current market price, it has a solid 9.5% annual dividend yield and distributes its dividend payouts every month.

What makes it a reliable Canadian dividend stock?

Peyto’s primary exploration and development activity is mainly focused on Alberta’s deep basin. Its consistent focus on high-quality, long-life natural gas reserves has helped the company improve its profitability in the last few years. Notably, in the five years between 2016 and 2021, Peyto’s adjusted earnings rose 30% from $0.69 per share to $0.90 per share, despite a minor drop in its total revenue during the same period. In 2021, it reported a solid adjusted net profit margin of 23.7%.

As environmental concerns are becoming more evident, nations across the world are committing to reduce their carbon dioxide emissions by switching from coal to natural gas. Given that scenario, the demand for natural gas is expected to increase significantly in the coming years, which should drive the prices higher and further expand the profitability of companies like Peyto Exploration. This is one of the key reasons why I expect this TSX energy stock to continue soaring.

Bottom line

If you want to generate $1,000 in monthly passive income, or $12,000 a year from Peyto’s dividends, you’ll need to buy 9,284 of its shares at $13.67 per share. To own these many shares at the current market price, however, you’ll have to invest $126,913 in the stock right now.

Clearly, if you want to earn passive income each month, one great way to do that is to buy TSX stocks that pay monthly dividends. But instead of putting all your money into one stock, having a mix of different stocks in your portfolio is better. This way, if one stock doesn’t do well, the others can help protect your invested money.

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 has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

More on Dividend Stocks

grow money, wealth build
Dividend Stocks

Got $3,000? 3 TSX Growth Stocks to Buy in January 2023

Top TSX growth stocks that look appealing for 2023.

Read more »

woman data analyze
Dividend Stocks

Need Passive Income? Turn $15,000 Into $851 Annually

This passive-income stock is already climbing higher, up 16% in the last three months! Yet it's still valuable, so you…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

Retirees: 3 Reliable Canadian Dividend Stocks to Buy Now for Passive Income

Top TSX dividend stocks now appear oversold.

Read more »

Dividend Stocks

For $100 in Passive Income Each Month, Buy 1,500 Shares of This REIT

REITs such as Northwest Healthcare can enable investors create a passive-income stream as well as benefit from capital gains.

Read more »

A colourful firework display
Dividend Stocks

2 Canadian Growth Stocks (With Dividends) to Start 2023 With a Bang

Here are two of the best dividend-paying Canadian growth stocks you can invest in at the start of 2023 and…

Read more »

sale discount best price
Dividend Stocks

4 Insanely Cheap Canadian Stocks to Buy for Passive Income

The recent bear market has created some incredible bargains, especially for those looking for passive income. Here are four cheap…

Read more »

A bull outlined against a field
Dividend Stocks

3 Cheap Stocks I’d Buy Before the Bull Market Arrives

Undervalued TSX stocks such as Savaria and Well Health can help investors generate market-beating gains when markets recover.

Read more »

Increasing yield
Dividend Stocks

5 Canadian Dividend Stocks With Yields of 4% or More

If you want dividends that yield over 4%, you don't have to look far. Here are five large-cap Canadian stocks…

Read more »