The Canadian stock market offers multiple options for investors to create resilient passive-income portfolios today. Investors looking to build a self-managed retirement income fund or add some reliable and recurring monthly passive income to their investment portfolios should check out Exchange Income (TSX:EIF), a $2.3 billion diversified holdings company that grows through investing like Warren Buffett, and shares the ever-growing spoils with its loyal investor base.
Exchange Income acquires proven profitable, well-established businesses with strong management teams, companies that already generate steady cash flow, operate in niche markets and still retain opportunities for organic growth. Its chosen niches are the aerospace, aviation services, and manufacturing industries. Investors love the stock, as can be seen in a rising share price.
Business has been good during this past decade, and EIF generated 132% in total returns to investors to beat the TSX’s 55% return during the same period. Dividends play a key role in returns generation, and EIC’s management knows how important dividends are to its investor base — it pays them monthly.
The company pays monthly dividends. Management didn’t cut the dividend throughout the pandemic. Income investors should love and trust the monthly dividend stock to continue depositing recurring and growing monthly pay checks into their bank accounts for many more months and years to come.
Why I’m bullish on Exchange Income stock to generate reliable monthly income
Exchange Income is a formidable dividend income play. It pays a $0.21 per share dividend every month, which should yield a respectable 4.6% annually. Management has a habit of raising the dividend by one cent per year in August and has raised dividends 16 times over the past 19 years.
Most noteworthy, the business’s acquisitions-led growth strategy has performed well during the past years, culminating in a record year in 2022. Revenue increased 46% year over year to $2.1 billion, and net income surged by 55% year over year to $3.29 per share. The business is growing in key areas, allowing income investors who depend on its monthly dividends to sleep well at night.
Actually, Exchange Income’s monthly dividends were much safer in 2022 than they were in 2021, and the trend could continue in 2023. The business grew distributable free cash flow by 20%, and its free cash flow payout rate improved from 58% in 2021 to 55% in 2022. The dividend was much safer going into 2023.
How to earn $1,000 in passive income every month
Income-oriented investors may add a reliable stream of monthly dividend paycheques if they buy Exchange Income stock today. To earn $1,000 in monthly passive income on EIF stock, you may buy 4,762 shares at the current price for a total consideration of about $260,767.12. Key transaction details are shown in the table below.
|COMPANY||RECENT PRICE||NUMBER OF SHARES||DIVIDEND||TOTAL PAYOUT||FREQUENCY|
|Exchange Income Corp. (TSX:EIF)||$54.76||4,762||$0.21||$1,000.02||Monthly|
Dividend investing strategies are proven wealth creation pathways that may not only help pay the bills but may grow a retirement nest egg over time. Exchange Income stock has generated more than 3,000% in total gains since 2004. It can still generate decent returns, as its acquisitions-led growth strategy continues to deliver revenue, earnings, and cash flow growth.
That said, diversification is still recommended across several companies, and asset classes. Consider buying the dips in Canadian real estate investment trusts (REITs) for juicy monthly income distributions. REITs usually pay monthly paycheques too, and their distributions can best be tax-sheltered in a Tax-Free Savings Account (TFSA). Unlike EIF stock’s eligible dividends (for tax credits), REIT distributions may be taxable at an individual’s marginal income tax rates.