How to Generate $500 in Passive Income Each Month

Here’s how you can start earning $500 in monthly passive income from this top Canadian dividend stock.

| More on:
A close up image of Canadian $20 Dollar bills

Image source: Getty Images

It’s always a good idea to start saving a part of your gross income at an early age. You can use these savings in difficult times or invest that money in some fundamentally strong Canadian dividend stocks to generate monthly passive income. Among all possible ways to earn monthly passive income, dividend investing is one of the most flexible, as you can invest or withdraw your money any time you want. Besides that, you can also adjust the amount you want to invest in dividend stocks at a time according to your risk appetite.

In this article, I’ll talk about a top dividend stock in Canada you can buy right now to earn $500 in passive income each month.

A top Canadian dividend stock for monthly passive income

When you’re investing in a dividend stock, you should always look at its financial and dividend-growth trends besides its dividend yield. On the one hand, a fundamentally weak stock with high yields may cut or even discontinue its dividends in difficult economic times. On the other hand, a company with a strong financial base can afford to keep rewarding its investors with high dividends each year, despite temporary economic uncertainties.

With these factors in mind, I find Sienna Senior Living (TSX:SIA) attractive to buy for the long term to earn monthly passive income. This Markham-based company currently has a market cap of $919 million. The stock is outperforming the broader market by a healthy margin in 2023 after losing nearly 28% of its value last year. While SIA stock is up 15.6% on a year-to-date basis at $12.60 per share, the TSX Composite Index has risen only 5.8% this year. At this market price, Sienna’s annual dividend yield is at 7.4%.

Key reasons to buy this stock now

At the end of the September quarter, Sienna Senior Living had a portfolio of 80 seniors’ living residences. Besides that, it also managed 13 third-party residences. Apart from its attractive dividends, this strong portfolio of government-funded long-term-care communities and private-pay retirement properties makes it stand apart from most of its peers.

In the five years between 2016 and 2021, Sienna’s total revenue rose 34%, and its adjusted earnings witnessed a decent increase of 15% despite facing 2020’s COVID-19-driven challenges. In recent years, the company has increased its focus on optimizing its balance sheet and financial position to minimize its risk profile.

If you don’t know it already, based on 2021’s census data, the +85 age group population in Canada is likely to nearly triple in the next 25 years. This increase in the elderly population is likely to create more opportunities for seniors’ living options providers like Sienna and help it expand its business further. This is one of the key reasons why its share prices can strengthen in the long run.

Sienna Senior Living$12.606,411$0.078$500.06Monthly
Prices as of Feb. 17, 2023

Bottom line

If you want to earn $500 in monthly passive income or $6,000 a year from its dividends, you’ll need to buy 6,411 shares of Sienna Senior Living at the current market price with an investment of $80,779. However, as I said at the start of this article, you can always adjust the money you want to invest in monthly dividend stocks according to your risk appetite. In addition, you should always aim to diversify your portfolio instead of pouring a big amount of money into a single stock.

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

Happy diverse people together in the park
Dividend Stocks

Gen Z Investors: How to Make $2.8 Million Before Retirement

Gen Z investors have one thing to their advantage: time. Invest wisely and practically any investment could turn into millions.

Read more »

A plant grows from coins.
Dividend Stocks

The 2 Top Monthly Dividend Stocks for March 2023

These are the top two monthly dividend stocks you can buy in Canada in March 2023.

Read more »

Canadian Dollars
Dividend Stocks

Got $6,500? Earn $48/Month Tax-Free Passive Income

High-dividend-paying Canadian stocks include Diversified Royalty. Let's see how a TFSA investment of $6,500 can help you earn $48 in…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

Need $100? The Best Dividend Stocks for Monthly Income

Here are two of the best monthly dividend stocks you can buy in Canada right now for passive income.

Read more »

Businessperson's Hand Putting Coin In Piggybank
Dividend Stocks

TFSA Investors: Make $100 Per Month With This TSX Dividend Stock

This top TSX dividend stock could help you earn $100/month in tax-free, passive income.

Read more »

Wireless technology
Dividend Stocks

2 TSX Stocks I’d Buy With a Tax Refund

If you have a tax refund coming your way, these two TSX stocks could provide you with stellar long-term income…

Read more »

man window buildings
Dividend Stocks

How to Invest in Retail Stocks When Everyone’s Talking About a Recession

Canadian retail stocks like grocery stores provide stable performance. If you like more yield, you can seek an entry point…

Read more »

Canadian energy stocks are rising with oil prices
Dividend Stocks

The 3 Industrial Stocks That Keep Canada’s Economy Going

Three industrial stocks with solid fundamentals are safer options in the current market environment and should add stability to your…

Read more »