How I’d Invest $1000 in February to Make Easy Passive Income

Looking to earn some extra passive income in February but don’t have much cash? Build an easy portfolio with these top dividend stocks.

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If you’ve got some fresh capital to invest in February, there are still plenty of opportunities to collect passive income. Certainly, the market has quickly recovered this year. Yet, many dividend stocks continue to trade at attractive valuations with decent dividend yields.

If you have $1,000 to invest, here are three top TSX stocks to consider buying for easy passive income.

Dream Industrial REIT: Quality real estate for monthly passive income

Dream Industrial REIT (TSX:DIR.UN) is a good name to buy for monthly passive income. At $14.40 per unit, it trades with a still attractive 5% distribution yield. Dream is a leading owner and manager of industrial real estate in Canada, the U.S., and Europe.

Dream has enjoyed high-single digit cash flow per unit growth in 2022. Given that its average portfolio rents are significantly below market, it should capture strong organic growth from new leases and rent renewals in 2023.

Even after a 23% run-up so far this year, the stock is still cheap and trades at a discount to its private market value. Put $1,000 into Dream stock and you’d earn $4.03 of monthly passive income (or $48.30 annually).

Brookfield: A global infrastructure stock with years of passive income growth

Another stock that would make a good buy in February is Brookfield Infrastructure Partners (TSX:BIP.UN). At $46.44 per unit, it earns a 4.17% distribution yield. It operates a diversified portfolio of high-quality infrastructure businesses focused on energy, transportation, utilities, and data.

Brookfield just announced year-end results for 2022. Funds from operation (FFO) per unit (its core measure of cash flows/profitability) grew 12% to $2.71 per unit. For a utility-like business, that is impressive growth. Likewise, the company just increased its 2023 dividend by a nice 6%. It already has an impressive decade-plus track record of dividend growth.

After the recent dividend increase, a $1,000 investment in BIP stock would earn $10.86 of quarterly passive income (or $43.43 annually).

AltaGas: A play on energy and utilities

AltaGas (TSX:ALA) is a great passive income stock if you want exposure to utilities and energy. At $24.80 per share, it pays a 4.6% dividend yield. The North American energy infrastructure operator runs a large natural gas utility business in the United States. This is complimented by an energy processing and midstream business in Western Canada.

AltaGas has been in the process of a turnaround for several years. It has sold off non-core assets and drastically reduced debt to a much more sustainable level. Going forward, its utility business is expected to enjoy above-average growth. As a result, AltaGas expects to grow earnings per share by a nice mid-single digit rate in 2023.

In December, AltaGas increased its dividend by 6%. This is its second dividend increase since 2020. Put $1,000 into this passive income stock and you would earn $11.20 of dividends per quarter (or $44.80 per year).

The Foolish takeaway

Even if you only have $1,000, you can start building streams of passive income. Pick good quality businesses that also have growth ahead. Re-invest your dividends back into more passive income-paying stocks and your passive income stream could compound quicker than you think.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCY
Dream Industrial REIT14.3769$0.05833$4.03Monthly
Brookfield Infrastructure Partners46.4121$0.517$10.86Quarterly
AltaGas24.8140$0.28$11.20Quarterly
Prices as of February 2, 2022

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 Robin Brown has positions in Brookfield Infrastructure Partners and Dream Industrial Real Estate Investment Trust. The Motley Fool recommends Brookfield Infrastructure Partners and Dream Industrial Real Estate Investment Trust. The Motley Fool has a disclosure policy.

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