How I’d Invest $600 a Month to Target a $490 Yearly Income

The S&P/TSX Composite Index was up 187 points in early afternoon trading on Monday, June 26. Despite the nice start to this week, the TSX Index has steadily lost value over the past six months. In this environment, investors may want to switch to an income-oriented strategy. However, many Canadians do not have a lot of cash on hand right now.

Today, I want to explore how you can look to invest $600/month to eventually reach an attractive annual income target. After 12 months of those $600 contributions, we will have reached $7,200. This will be our baseline to generate yearly income. Let’s jump in.

This monthly dividend stock is one of the first I’d invest in

First National Financial (TSX:FN) is a Toronto-based company that originates, underwrites, and services commercial and residential mortgages in Canada. Shares of this dividend stock have dropped 6.4% month over month as of early afternoon trading on June 26. The stock is still up marginally in the year-to-date period.

This stock was trading at $37.57 at the time of this writing on Monday, June 26. For our hypothetical, we can snatch up 60 shares of First National for a purchase price of $2,254.20. The stock currently offers a monthly distribution of $0.20 per share. That represents a tasty 6.3% yield. We can now generate monthly income of $12 with our shares of First National. That works out to annual income of $144.

Here’s a REIT that offers super income right now

Allied Properties REIT (TSX:AP.UN) is a Toronto-based real estate investment trust (REIT) that is a leading operator of distinctive urban workspace in Canada’s major cities and network-dense urban data centre space. Its shares were up 1.60% in early afternoon trading on Monday, June 26

The REIT was trading at $20.88 at the time of this writing. In this scenario, we can grab 120 shares of Allied Properties REIT for a purchase price of $2,505.60. Allied Properties REIT currently offers a monthly dividend of $0.15 per share, which represents a monster 8.7% yield. That means we can churn out monthly income of $18, which works out to annual income of $216.

One more monthly income stock to help reach our goals

Bird Construction (TSX:BDT) is a Mississauga-based company that provides construction services in Canada. This dividend stock has dropped 5.6% month over month at the time of this writing. That has pushed Bird Construction into negative territory in the year-to-date period.

In the first quarter of fiscal 2023, Bird Construction delivered revenue growth of 12% to $536 million. The company also set new records for its backlog. Shares of this dividend stock currently possess a very favourable price-to-earnings ratio of 8.8.

This stock was trading at $8.06 in early afternoon trading on June 26. For our final purchase, we can snatch up 302 shares of Bird Construction for a total price of $2,434.12. The stock offers a monthly distribution of $0.036 per share, representing a strong 5.3% yield. This purchase allows us to generate monthly income of $10.87. That works out to annual income of $130.44.

Bottom line

These investments will allow us to generate monthly income of $40.87 once we have reached 12 months of making our $600 monthly contributions. Moreover, we will now be able to count on annual income of $490.44.