Get Passive Income of $450/Month With This TSX Stock

Here’s how this TSX dividend stock could help you earn $450 in monthly passive income in Canada.

| More on:
Payday ringed on a calendar

Image source: Getty Images

After the COVID-19-related restrictions forced businesses to allow their staff to work remotely, the global stock markets witnessed higher volumes with the help of increased participation from new retail investors. While this increased participation pushed the TSX Composite Index to record-high levels in April 2022, the overall year 2022 didn’t turn out to be very rewarding for most retail investors, as a sharp market selloff followed the rally.

Earn monthly passive income in Canada from stock investing

Growing macroeconomic concerns amid high inflation and rapidly rising interest rates triggered a massive crash in high-growth tech stocks in 2022. In these tough economic times, most new investors usually realize the importance of having some quality dividend stocks in their portfolios. This is because many such fundamentally strong dividend stocks on the Toronto Stock Exchange keep rewarding their investors with healthy dividends irrespective of economic cycles.

Now, let me quickly talk about one such stock in Canada that can help you earn reliable monthly passive income with its dividends for years to come.

Freehold Royalties stock

Freehold Royalties (TSX:FRU) is a Calgary-headquartered energy firm that is focused primarily on managing oil and gas assets in North America. Based on its 2021 financial data, the company made slightly less than 80% of its revenue from its home market, with the remaining coming from the United States.

Despite the broader market turmoil, this TSX monthly dividend stock largely traded on a positive note in 2022, as it currently trades at $15.25 per share with nearly 31% year-to-date gains. By comparison, the TSX Composite benchmark has seen a 9.5% value erosion this year. Freehold Royalties distributes its dividends on a monthly basis and has a solid annual dividend yield of 7.1% at the current market price.

What makes it a reliable dividend stock to own?

Now, let me give you a rough idea about the ongoing growth trend in Freehold Royalties’s financials. In the five years between 2016 and 2021, the company’s total revenue rose by 60%. Growing revenues and a stronger commodity price environment have helped the company post an outstanding 630% growth in its adjusted earnings during the same five-year period.

Bay Street analysts expect the ongoing growth trend in its financials to accelerate further in the near term, as its 2022 earnings are estimated to be around $1.44 per share, reflecting an outstanding 172% year-over-year increase.

To maintain this growth in the coming years, Freehold Royalties is continuing to expand its asset base. In the last two years, the company has added more than $500 million worth of U.S.-based assets to its portfolio. Moreover, its balanced commodity and basin exposure and strong presence in the North American energy industry make FRU one of the top monthly dividend stocks to buy in Canada now.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCY
Freehold Royalties Ltd$15.255,000$0.09$450Monthly
Prices as of Dec 19, 2022

Bottom line

If you buy about 5,000 shares of Freehold Royalties, you can easily earn $450 in monthly passive income from its reliable dividends. To buy these many shares at the current market price, however, you’ll have to invest $76,250 in the company. While Freehold’s example must have given you a good idea about earning monthly passive income by investing in quality TSX stocks, you must not forget to diversify your portfolio by including more such stocks to minimize your risks.

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

More on Dividend Stocks

calculate and analyze stock
Dividend Stocks

TFSA: Invest $20,000 and Get $867/Year Without Lifting a Finger

Compound passive income by investing tax-free in your TFSA. Check out this mini-portfolio that could turn $20K into $867/year in…

Read more »

retirees and finances
Dividend Stocks

How to Create a Million-Dollar TFSA in Two Decades

Your TFSA could create riches you didn't know were possible, but only if you commit again and again to your…

Read more »

A plant grows from coins.
Dividend Stocks

TFSA Top Stocks: 2 Cheap Dividend-Payers to Buy Before January Ends

TFSA investors can appreciate dividend-paying stocks like Barrick Gold at these modest valuations.

Read more »

analyze data
Dividend Stocks

3 Top Small-Cap Dividend Stocks to Buy in January 2023

Given their high dividend yields and attractive valuations, the following three small-cap stocks would be excellent buys.

Read more »

exchange-traded funds
Dividend Stocks

2 Ways to Score a Richer Monthly TFSA Payout

These two Vanguard ETFs pay high yields and are steady-paying holdings in a TFSA.

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

How to Generate $10 Every Day (That’s $3,650 a Year!) in Passive Income

Purchasing blue-chip TSX stocks can help investors earn a steady stream of dividend income and benefit from long-term capital gains.

Read more »

growing plant shoots on stacked coins
Dividend Stocks

How to Generate $500 in Passive Income Each Month

Canadian investors from all walks of life can benefit from generating an extra $500 in passive income every month. Here's…

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

The 2 Canadian Dividend Stocks You’ll Want to Own in Tough Times

CN Rail (TSX:CNR) and BCE (TSX:BCE) are great dividend growers perfect to buy on a recession dip.

Read more »