There is a misconception that there are no fixed returns in the stock market. By investing in high-quality dividend stocks that give at least a 6% dividend yield, you can start earning $300 a month from the next quarter. While your end goal is clear, the next figure you need to complete the equation is when you want to start earning this $300 and how much you can invest at the moment. Once you have these two figures, we can work around various permutations and combinations to achieve our $300/month goal.
Dividend stocks that can give you up to 6% average yield
If you want to start earning $300 as soon as possible, you need to invest $60,000 in stocks that can give you a 6% dividend yield. Now is a ripe time, as many dividend stocks are trading at their lows as interest rate hikes have made their balance sheet debt expensive.
TC Energy
Oil and gas pipeline operator TC Energy’s (TSX: TRP) stock is under pressure because of a lawsuit and an over-budget pipeline. But the company has several income-generating pipeline projects that make up for any weak projects. TC Energy could grow its distributable cash flow in the coming years as its gas pipelines become operational. These pipelines will open Canada’s liquefied natural gas (LNG) reserves for export in Europe and Asia.
Invest in more than two stocks
While TC Energy is a good stock, it carries energy infrastructure risks, like delays in project approval and fluctuation in oil and gas prices. Thus, it is better to diversify your investment in other sectors that are unaffected by the factors which affect TC Energy.
A good dividend income stock is CT REIT (TSX: CRT.UN). It enjoys the status of a trust, as well as Canadian Tire. So Canadian Tire outsources the development and maintenance of its stores to CT REIT and even pays rent at a 1.5% lease appreciation per year. The REIT doesn’t have to look for a tenant. It already has 100% occupancy before developing a project. As CT REIT is a trust, it distributes a major portion of its rental and sales income to shareholders to enjoy its no-tax benefit. It is the only REIT that grows its distribution by more than 3% annually.
Another good stock for diversification is Power Corporation of Canada (TSX: POW). POW is a financial services holding company with insurance, wealth management, real estate investment, and private equity businesses in its portfolio. All these firms perform differently in different market situations, balancing each other’s weaknesses and strengths. POW gets dividends from its asset holdings, which it passes on to its shareholders.
Like the above two stocks, POW increases dividends annually at an average rate of 7%. However, it paused dividend growth for six years after the 2008 Financial crisis affected all financial services.
How much money do you need to invest to make $300 a month?
If you are looking to earn $300 per month from next quarter onwards, you can invest up to $60,000 in the above three stocks in the following order.
| Stock Ticker | Investment | Share Price | Dividend per Share | Share Count | Dividend Income |
| TRP | $30,000 | $52.23 | $3.72 | 574 | $2,135.28 |
| CRT.UN | $15,000 | $15.56 | $0.90 | 964 | $865.86 |
| POW | $15,000 | $37.69 | $2.10 | 398 | $835.80 |
| Total | $3,836.94 |
TC Energy stock is trading below $53. If you invest $30,000 in it now, you can buy 574 shares and lock in a 7.1% yield. With a $3.72 annual dividend per share, your dividend income could come to $2,135/year ($177.94/month) from this stock alone. Similarly, a $15,000 investment in the remaining two stocks can give you a cumulative dividend income of $1,701/year or $141.8/month. Your average yield from the three stocks comes to 6.3%. And this income will keep growing as all three stocks have a record of growing dividends.
But if you don’t have $60,000, you can invest $4,000 annually for the next 15 years and accumulate shares of the above stocks. If you are using this method, try to buy stocks when they are at their 52-week low to lock in a higher yield.
