How I’d Invest $300 a Month to Target a $2,400 Yearly Passive Income

Here’s a great monthly Canadian dividend stock that can help you create a reliable source of passive income without requiring a hefty investment upfront.

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Are you seeking a reliable source of monthly passive income in Canada? If so, investing in quality dividend stocks is a must-try. Unlike most other ways to generate passive income every month, dividend investing doesn’t require hefty initial investments. Even if you set aside as low as $300 a month, you can expect to generate $200 a month, or $2,400 in yearly passive income, for years to come.

Before I give you the math for that, let’s take a closer look at one of the best Canadian monthly dividend stocks that you can consider buying in 2023.

Invest in this Canadian monthly dividend stock now

Whether you are investing to generate monthly passive income or to enjoy handsome capital gains, you should try to stick to the Foolish Investing Philosophy by taking a long-term approach. This way, you can expect healthy returns on your investments over the long term without worrying about inevitable short-term market ups and downs.

That said, NorthWest Healthcare Properties REIT (TSX:NWH.UN) could be a reliable stock to buy now to hold the long term, especially after a recent steep correction in its share prices. This healthcare sector-focused open-ended real estate Investment trust (REIT) is headquartered in Toronto. It currently has a market cap of $2 billion, as its stock trades at $8.19 per share after losing nearly 14% of its value in 2023 so far. NorthWest Healthcare distributes its dividend payouts on a monthly basis and currently has an impressive annualized dividend yield of 9.8%.

Now, let me quickly highlight some fundamental factors that make it a great monthly dividend stock in Canada to own for years to come.

Key fundamental factors

The first main thing that makes NorthWest a reliable investment for the long term is its well-diversified portfolio of high-quality assets worth $11 billion. At the end of the fourth quarter of 2022, its portfolio had 233 income-producing assets with a gross leasable area of more than 18 million square feet and a strong weighted average lease expiry of close to 14 years. Besides its home market, most of its properties are located in prime markets like Europe, Australia, New Zealand, and Brazil.

Secondly, NorthWest currently has a solid occupancy rate of around 97%, which reflects the strength in demand for healthcare properties. Moreover, most of its properties are leased to reputable hospitals, medical offices, and clinics, which reduces its risk profile. You can expect this Canadian REIT’s financial growth to improve in the long run, as countries across the globe continue to focus on improving their healthcare infrastructure.

Bottom line

If you want to earn $2,400 in yearly passive income (or $200 a month) from NorthWest Healthcare’s dividends, you’ll need an investment of $24,570 to buy about 3,000 of its shares at the current market price. And if you invest $300 a month in its stock, you will be able to buy these many shares in fewer than seven years.

Northwest Healthcare Properties REIT$8.193,000$0.06667$200Monthly
Prices as of Apr. 6, 2023

But remember that its share prices and dividend yield are bound to fluctuate during this period, which will change the number of shares you can buy monthly and the amount you receive in monthly passive income from its dividends accordingly. That said, it’s always a good practice to diversify your portfolio by investing in multiple monthly dividend stocks to minimize your risks instead of pouring such a large sum 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 recommends NorthWest Healthcare Properties Real Estate Investment Trust. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

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