Investing is different for everyone at different stages. Some invest with an aim to make significant capital gains and fulfil their dreams, some for a house, some to generate wealth, and some to build a passive source of income. Your investment objectives change depending on age, and your financial and personal situation.
The stock market has something for everyone. There are growth stocks for capital appreciation and wealth creation. There are dividend stocks for passive income.
This top dividend stock gives $106 in monthly passive income
Not many dividend stocks give monthly payouts, except for REITs. But another problem with REITs is they do not grow their distributions frequently. Beating all odds is CT REIT (TSX:CRT.UN), the real estate investment trust of Canadian Tire (TSX:CTC.A). The REIT has been paying monthly distributions since 2014 and growing them annually. Even in 2023, the REIT increased its distribution by 5% while earning more than 90% of its rental income from Canadian Tire.
Canadian Tire missed its second-quarter earnings estimates as demand for sporting goods and home improvement fell. The retailer is feeling the pinch of the consumer demand shift from discretionary items to essential items. Its expectations are different under the current macroeconomic conditions. The stock of the retailer and the REIT dipped. But its long-term cash flows are intact. While the retailer’s revenue growth may slow or stagnate for some time, it has enough cash flow to continue paying rent. It means CT REIT could keep paying distributions.
The REIT started with a $0.054167 distribution/month in 2014 and increased it to $0.07485 in July 2023. If you invested $2,000 annually in this stock, you could have accumulated a monthly passive income of $106 in 10 years. Here’s how.
Buy 1,427 shares of this dividend stock for $106 in monthly passive income
I have prepared a table assuming you invested $2,000 in CT REIT every year between January 1 and 20. The stock price reflects a rough figure of the January trading price of every year. A $2,000 investment in January 2014 would have brought you 179 CT REIT shares, which traded around $11.15/share.
| Year | CT REIT Stock Price | Stocks Purchased | Total Share Count | Annual Dividend Per Share | Annual Dividend Income | Monthly Passive Income |
| 2023 | $16.00 | 125 | 1427 | $0.8982 | $1,281.73 | $106.81 |
| 2022 | $16.94 | 118 | 1302 | $0.854 | $1,111.34 | $92.61 |
| 2021 | $15.69 | 127 | 1184 | $0.821 | $972.32 | $81.03 |
| 2020 | $16.00 | 125 | 1057 | $0.793 | $837.86 | $69.82 |
| 2019 | $12.94 | 155 | 932 | $0.757 | $705.71 | $58.81 |
| 2018 | $14.36 | 139 | 777 | $1.000 | $777.00 | $64.75 |
| 2017 | $14.92 | 134 | 638 | $0.700 | $446.57 | $37.21 |
| 2016 | $12.71 | 157 | 504 | $0.680 | $342.74 | $28.56 |
| 2015 | $11.90 | 168 | 347 | $0.663 | $230.06 | $19.17 |
| 2014 | $11.15 | 179 | 179 | $0.650 | $116.35 | $9.70 |
The annual distribution after adding the 12 monthly payouts came to $0.65. So 179 shares of CT REIT would have earned you $116 in annual passive income. The monthly passive income may differ as the REIT increases distributions in July.
If you had invested another $2,000 the next year, you would have earned $0.663 in annual distribution (2% distribution growth by the REIT) on 347 shares (179 purchased in 2014 and 168 in 2015). That increases your average monthly payout to $19.17. If you kept investing $2,000 annually, you could have accumulated 1,427 shares in 10 years. And with the REIT increasing distributions annually, your passive income would have increased to $106.81.
All this is past data. As you can see, with every passing year, the share price is increasing, and the number of shares $2,000 can buy is falling.
Investing tip
In the worst-case scenario, CT REIT might pause its distribution growth. Even if you start investing today, you could earn $106 in monthly passive income by accumulating 1,427 shares of the REIT. You could either accumulate these shares through small monthly investments, average annual investments, or opportunistic buys like today.
The weak macro environment has pulled the REIT’s stock price down to $14.67, which can buy you 136 shares for $2,000. This way, you can reduce your cost and enhance your returns. But be mindful not to concentrate your portfolio on one or two stocks. Diversify your investments across different stocks in various sectors.
