Canadian investors might sorely need some passive income coming their way. It can be easy to recommend investing, but what happens when you don’t have the cash to invest in the first place?
Today, I’m going to look at a passive-income stream that can load you up with cash immediately. It’s not a scam, it’s not a gimmick, and it’s super easy. Plus, investing that income could then create a huge influx of monthly passive income that can last you a lifetime.
Creating a passive-income stream
First up, let’s look at a top easy way to create passive income. After some initial set up (not much at all, to be frank), you can get started on creating hundreds in income each and every month.
The passive-income stream I would recommend is renting out storage. Practically everyone has some kind of storage that they could clear out and rent to small businesses or simply someone looking for extra space.
Even if you live in an apartment building, you likely have a storage space that could be cleared out and used. If you own a home, consider a shed, garage, attic or basement. From there, look up what the average storage units cost in your area. Then undercut them!
For example, let’s look at Vancouver, Toronto, and Montreal as examples. Here, storage units cost around $300, $250, and $200 on average, respectively. So, even cutting off $20 could bring businesses racing to your door. Charge that each month, and you could have anywhere from $2,000 to $3,500 per year!
Put that to work
Now that you’ve got a renter on board for your storage unit, the rest is quite easy. You can use that cash each month to invest steadily in a monthly passive-income stock. One I would recommend today is A&W Revenue Royalties Income Fund (TSX:AW.UN).
This royalty fund collects cash both from revenue from A&W locations as well as fees from the use of its logo. This includes from franchises as well as in store products. It’s a less-risky option than dividend stocks that depend on business production overall.
A&W stock currently offers a 5.45% dividend yield as of writing, with shares down 14% in the last year. This could certainly bounce back quickly when the economy recovers as well. Now, let’s see how much we can make by putting these two together.
Five years later
Let’s say you’re collecting around $2,700 in cash from rental spaces each year. You then use that cash to reinvest in your passive-income stock year after year. In the first year, we see A&W stock rise back to pre-fall prices. From there, it goes back to a compound annual growth rate (CAGR) of 4.75% in share price and 3.36% for the dividend in the last decade.
Here is what that could look over five years with dividends reinvested.
| Year | Share Price | Shares Owned | Annual Dividend Per Share | Annual Dividend | After DRIP Value | Annual Contribution | Year End Stock Price | New Shares Purchased | Year End Shares Owned | New Balance |
| 1 | $35.80 | 75 | $1.92 | $144.00 | $2,829.00 | $2,700 | $41.53 | 68.48 | 143.48 | $5,672.84 |
| 2 | $41.53 | 143.48 | $1.98 | $284.71 | $6,243.15 | $2,700 | $43.50 | 68.61 | 212.09 | $9,227.72 |
| 3 | $43.50 | 212.09 | $2.05 | $434.95 | $9,660.99 | $2,700 | $45.57 | 68.8 | 280.89 | $12,795.99 |
| 4 | $45.57 | 280.89 | $2.12 | $595.35 | $13,394.62 | $2,700 | $47.73 | 69.04 | 349.93 | $16,689.99 |
| 5 | $47.73 | 349.93 | $2.19 | $766.52 | $17,469.13 | $2,700 | $50.00 | 69.33 | 419.26 | $20,935.53 |
From the beginning to the end of your five-year period, you will have made $16,200 from your passive-income stream. From reinvesting dividends and seeing share growth, you could end up with $20,935.53! That’s a return of $4,735.53, annual passive income at $766.52, and monthly income at $288.72 from your passive-income stream. And wasn’t that easy?
