Canadian investors may be rightfully anxious, as we approach the final days of the fall season in 2023. This season started off well in March and the first days of April, only for the S&P/TSX Composite Index to lose momentum in late April and throughout the month of May.
Today, I want to explore a passive-income strategy and target three undervalued dividend stocks that can help us jumpstart an income-oriented portfolio this summer. In this hypothetical, we will be making our purchases in a Tax-Free Savings Account (TFSA). Moreover, we are going to use $30,000 total. Let’s jump in.
Image source: Getty Images
Investors can rely on this cheap stock for passive income for years and years
Freehold Royalties (TSX: FRU) is a Calgary-based company that is engaged in acquiring and managing royalty interest in crude oil, natural gas, natural gas liquids, and potash properties in Western Canada and the United States. Shares of this dividend stock have dropped 6.5% month over month as of close on June 8. The stock is now down 10% in 2023.
This energy stock is a terrific option for investors who want a consistent passive-income vehicle. Freehold Royalties has consistently delivered positive cash flow that has covered its monthly payout. Shares of Freehold Royalties currently possess a favourable price-to-earnings (P/E) ratio of 10.
The dividend stock closed at $13.50 on Thursday, June 8. For our hypothetical, we can snatch up 740 shares of Freehold Royalties for a purchase price of $9,990. This stock offers a monthly dividend of $0.09 per share. That represents a super 8% yield. The investment will allow us to generate monthly passive income of $66.60 going forward.
Here’s a high-yield dividend stock that can help you build passive income this month
Northwest Healthcare REIT (TSX:NWH.UN) is a Toronto-based real estate investment trust (REIT) that owns and operates a global portfolio of high-quality healthcare real estate. Its shares jumped 4.2% on Thursday, June 8.
Investors should still be eager to get in on this REIT in the middle of 2023. It has corrected sharply from the heights it reached during the pandemic, but investors should not underestimate the positive trajectory for health care that should support this REIT going forward. This dividend stock is trading in attractive value territory compared to its industry peers.
Shares of Northwest Healthcare REIT closed at $7.92 on June 8. For our hypothetical, we can purchase 1,262 shares of the REIT for a grand total of $9,995.04. This stock offers up a monthly distribution of $0.067 per share, which represents a monster 10% yield. The investment will allow us to churn out monthly passive income of $84.55 in the months ahead.
One more undervalued monthly dividend stock I’d target today
Bird Construction (TSX: BDT) is the third and final cheap dividend stock I want to target to round out our passive-income portfolio. This Mississauga-based company provides construction services across Canada. Shares of Bird Construction have climbed 5.4% so far in 2023.
This dividend stock closed at $8.54 on Thursday, June 8. We can gobble up 1,170 shares of Bird Construction for a purchase price of $9,991.80. The stock last paid out a monthly distribution of $0.036 per share, representing a strong 5% yield. This purchase will allow us to generate monthly passive income of $42.12.
Conclusion
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| FRU | $13.50 | 740 | $0.09 | $66.60 | Monthly |
| NWH.UN | $7.92 | 1,262 | $0.067 | $84.55 | Monthly |
| BDT | $8.54 | 1,170 | $0.036 | $42.12 | Monthly |
These investments will allow us to generate monthly passive income of $193.27. That works out to annual passive income of $2,319.24 on an original investment of $30,000.
