If you’re looking to earn reliable monthly passive income in Canada and haven’t tried investing in dividend stocks yet, you might be missing out on a great opportunity. Dividend investing isn’t as difficult as new investors might think. In fact, some dividend-paying stocks turn out to be more rewarding in the long run compared to some high-volatility growth stocks. This is why most experienced long-term investors prefer to invest a large part of their portfolio in fundamentally strong dividend stocks.
In this article, I’ll give an example of a quality TSX dividend stock that could help you earn passive income each month.
A top Canadian monthly dividend stock to buy now
While it could be argued that most high-dividend-yielding stocks have a strong business model to support their regular dividend payouts, you should still pay attention to a dividend-paying company’s future growth outlook before making an investment decision. Speaking of dividend-paying stock with a stable growth outlook, Pembina Pipeline (TSX: PPL) could be worth considering.
This Calgary-headquartered firm focuses on providing energy transportation and midstream services to North America’s energy industry. Pembina has a market cap of $25.4 billion at the time of writing, as its stock trades at $47.29 per share with 23.2% year-to-date gains, outperforming the broader market by a wide margin. By comparison, the TSX Composite benchmark has slipped by 5.7% so far this year. PPL stock distributes its dividend payouts every month and has an annual yield of around 5.5% at the current market price.
What makes it a good stock to buy now?
Pembina Pipeline has over six decades of history serving the North American energy market with its highly integrated transportation and midstream services. The strength of its business model also reflects in its long-term financial growth trends. For example, its adjusted earnings grew by 97% in the five years between 2016 and 2021 with the help of a 102% jump in revenues. This spectacular financial growth also helped Pembina raise its annual dividends by 33% from $1.90 per share to $2.52 per share during the same period.
While North America continues to be its primary focus, Pembina Pipeline has increased its efforts to expand its global presence in recent years, which should accelerate its financial growth further in the long run. The company is also keeping an eye on new opportunities in carbon capture and hydrogen segments. Moreover, Pembina’s strong balance sheet and robust cash flows make it easy for it to consider new quality acquisitions to accelerate business growth.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Pembina Pipeline | $47.29 | 460 | $0.2175 | $100.05 | Monthly |
| Prices as of Dec 13, 2022 |
Bottom line
While these positive factors could help PPL stock continue soaring in the long run, this Canadian monthly dividend stock could also help you earn reliable monthly passive income. To earn $100 each month from its dividends, you’ll need to buy 460 of its shares at the current market price.
To own these many shares, however, you’ll need to invest $21,754 in PPL stock right now. While this example gives you a good idea of how easily you can create a reliable source of passive income in Canada with dividend investing, you must consider diversifying your portfolio by including more such stocks to it instead of relying on a single stock.
