How Much Do You Need to Invest to Earn $100 a Month in Dividends?

Quality dividend stocks can help you create a passive-income stream with a small amount of capital. As dividend payments are not guaranteed, investors should avoid chasing a high dividend yield. Instead, you should focus on a company’s fundamentals and analyze its ability to maintain and even increase these payouts across business cycles.

Here are three top TSX stocks you can consider buying in 2023. So, let’s see how much you need to invest to earn $100 a month in dividends.

SmartCentres REIT stock

Valued at a market cap of $4 billion, SmartCentres (TSX:SRU.UN) is one of the largest real estate investment trusts (REITs) in Canada. It owns a portfolio of 189 properties spanning 34.9 million square feet and enjoys an occupancy rate of 98.2%. With $11.8 billion in assets, SmartCentres pays shareholders a monthly dividend of $0.15 per share, translating to a forward yield of 7.8%.

Despite its massive size, SmartCentres added 273,150 square feet of space to its portfolio. It also emphasized construction has begun for its high-rise residential projects in Vaughan, Ottawa, and Laval, which indicates the company is diversifying into mixed-use development properties.

In the second quarter (Q2) of 2023, SmartCentres increased its net operating income by $4.2 million, or 3.2%, year over year. Its funds from operations per unit rose to $0.55 per unit in Q2 from $0.49 per unit in the year-ago period due to higher rental income. With a payout ratio of 93.8%, the REIT should be able to maintain its dividend payout.

Priced at 11 times 2023 earnings, the TSX stock also trades at a discount of 21% to consensus price target estimates.

goeasy stock

A company part of the consumer lending market, goeasy (TSX:GSY) has created massive wealth for long-term investors. In the last decade, the TSX stock has returned 905% to shareholders after adjusting for dividends.

Despite these outsized gains, GSY pays shareholders an annual dividend of $3.84 per share, indicating a tasty yield of 3.5%.

Despite the cyclical nature of its business, goeasy has increased dividends by 18% annually in the last 16 years. Priced at eight times forward earnings, GSY stock trades at a discount of almost 60% to consensus price target estimates.

Manulife Financial stock

The final dividend stock on my list is Manulife Financial (TSX:MFC), a domestic insurance giant. In addition to insurance, its portfolio of solutions includes banking, annuity, wealth management, and asset management.

With $1.3 trillion in assets under management, Manulife increased its new business value, or NBV, by 10% in Q2 of 2023. The company also ended the June quarter with a life insurance capital adequacy test of 136%. The ratio is used to measure or assess the financial conditions of insurers, and a ratio of more than 100% is generally acceptable.

Priced at 7.1 times forward earnings, MFC stock is forecast to increase earnings by almost 12% annually in the next five years, which should support dividend hikes. Manulife currently pays shareholders an annual dividend of $1.46 per share, indicating a yield of 5.7%.

The Foolish takeaway

The average dividend yield of these three TSX stocks stands at 5.67%. So, if you want to earn $1,200 each year (or $100 each month) in dividends, you need to invest a total sum of $21,164 equally distributed in these three stocks.