For Passive Income: How to Turn $25,000 Into $158 Per Month

High-yield, monthly dividend stocks trading on the TSX such as Slate Grocery can help you earn a predictable stream of income.

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Stocks that offer a monthly dividend payout enable investors to create a stable income stream. These payouts can either be reinvested to benefit from the power of compounding or used to pay utility and grocery bills.

As dividend payouts are not guaranteed, it’s essential to identify companies with strong fundamentals, predictable cash flows, and widening earnings. Here are three such dividend stocks trading on the TSX that can help you make $100 each month.

Exchange Income stock

A TSX company operating in the aerospace vertical, Exchange Income (TSX:EIF) offers you a dividend yield of 4.7%. It started paying investors a monthly dividend in 2004 and has since distributed over $750 million in dividends.

Its robust balance sheet and diversified portfolio of subsidiary companies have allowed Exchange Income to increase dividends 16 times in the last 19 years, creating significant shareholder wealth in the process.

For instance, EIF stock has returned 271% in the last 10 years and 1,400% since June 2008, easily outpacing the broader indices. Priced at 14 times forward earnings, Exchange Income is reasonably valued and trades at a discount of 25% to consensus price target estimates.

Slate Grocery REIT stock

A grocery-focused real estate investment trust (REIT), Slate Grocery (TSX:SGR.UN) offers you a yield of 9.3%. It owns and operates a portfolio of grocery-anchored properties in the U.S., providing shareholders exposure to a recession-resistant sector.

Exchange Income$51.90160$0.21$33Monthly
Slate Grocery$12.44670$0.098$65Monthly
Diversified Royalty$2.792,987$0.02$60Monthly

Demand for its well-located properties continues to drive leasing momentum for the company, resulting in higher occupancy rates and revenue growth within its portfolio. Slate Grocery expects its below-market rents and strong liquidity position to allow it to grow via strategic acquisitions, which should be accretive to revenue and earnings.

Slate Grocery ended Q1 with an occupancy rate of 93.7% while completing 589,804 square feet of total leasing. The new deals were completed at 17.1% above comparable average in-place rent, while renewals were 8.4% higher above expiring rental agreements.

Analysts remain bullish on the REIT and expect Slate Grocery shares to gain 23% in the next 12 months.

Diversified Royalty stock

A small-cap TSX stock with a high dividend yield of 8.5%, Diversified Royalty (TSX:DIV) should be on your radar in June 2023. A multi-royalty company, Diversified Royalty acquires top-line royalties from multi-location businesses and franchisors in North America. It aims to increase cash flow per share on the back of royalty purchases and the growth of these underlying businesses.

This should result in a stable monthly dividend and consistent increases over time. In Q1 of 2023, Diversified Royalty reported sales of $12.2 million — higher than $9.6 million in the year-ago period.

Comparatively, net income stood at $6.7 million in Q1, up from $6.2 million in the prior-year period. Diversified Royalty stock also trades at a discount of 41.5% to price target estimates.

The Foolish takeaway

An investment of $25,000 distributed equally in the three TSX stocks will help you generate $158 in monthly dividends. If the payouts are increased by 7% annually, your dividends will double in the next 10 years.

Each of the three TSX stocks also has the potential to enhance shareholder wealth via capital gains in the next 12 months.

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 Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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