Passive Income: How Much Should You Invest to Earn $1,000 Every Month?

Here’s one of the most flexible ways to earn a monthly passive income of $1,000 in Canada.

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As macroeconomic uncertainties continue to keep the stock market volatile, investors are flocking to add the shares of fundamentally strong dividend-paying companies. While Canadian dividend stocks can help you earn handsome monthly passive income, the question that most often arises is, “How much do you need to invest to create a reliable stream of passive income?”

In this article, we delve into this vital question. But first, let’s take a closer look at two of the best Canadian monthly dividend stocks that look attractive to buy now.

TransAlta Renewables stock

TransAlta Renewables (TSX:RNW) is a Canadian energy company with a market cap of $3.1 billion that primarily focuses on producing power using renewable resources. Its stock currently trades at $11.79 per share with 4.8% year-to-date gains. RNW offers an attractive 8% annualized dividend yield at the current market price and distributes its dividend payouts among investors every month.

In the first quarter of 2023, TransAlta Renewables posted a 16.8% YoY (year-over-year) decline in its total revenue to $119 million as lower wind resources affected its production. Nonetheless, higher interest income and lower sustaining capital expenditures kept optimism alive by driving its adjusted earnings up by 13.3% YoY to $0.17 per share.

As it continues the rehabilitation work of the Kent Hills wind facilities, TransAlta Renewables’s production and financial growth trends are expected to improve in the second half of 2023, which could help this Canadian monthly dividend stock inch up.

Sienna Senior Living stock

If you want to generate monthly passive income, Sienna Senior Living (TSX:SIA) could be another reliable stock to consider now. It’s a Markham-based company with a market cap of $840.6 million that provides a variety of assisted and independent living options to seniors in Canada. After rising by 5.7% on a year-to-date basis, its stock currently trades at $11.52 per share. At this market price, the company offers an 8.1% annual dividend yield.

After facing big challenges due to COVID-19-related restrictions in 2020, the demand for Sienna’s retirement and long-term-care segments has seen a gradual recovery in the last couple of years. In the first quarter this year, the company reported an 11% YoY increase in its retirement segment’s same-property net operating income (NOI). Similarly, same-property NOI in the long-term-care segment improved by 9.1% from a year ago.

Besides these recent gains in its NOI, rising rates for its services and improving occupancy at its properties should also help Sienna remain on the path to a healthy financial recovery in the coming quarters. Given that, the share prices of this monthly dividend-paying company could soar.

Invest now to earn $1,000 in monthly passive income

COMPANYRECENT PRICENUMBER OF SHARESINVESTMENTDIVIDEND PER SHARETOTAL PAYOUT (Monthly)DIVIDEND FREQUENCY
TransAlta Renewables$11.796,384$75,267$0.078$498Monthly
Sienna Senior Living$11.526,411$73,855$0.07833$502Monthly
Total$149,122$0.15633$1,000
Prices as of June 15, 2023

If you want to earn roughly around $1,000 in monthly passive income from these two dividend stocks, you can buy 6,384 shares of TransAlta Renewables and 6,411 shares of Sienna. To buy these many shares at their current market prices, however, you’ll need a total investment of around $149,122.

While this example aims to give you a good idea of how easy it could be to earn monthly passive income from Canadian dividend stocks, I highly recommend that you avoid investing such a large amount of money in one or two stocks, especially if you don’t have a very high-risk appetite. Instead, you should always try to diversify your portfolio by adding more such quality dividend stocks to it.

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 has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

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