Investors seeking steady passive income could consider investing in shares of high-quality, dividend-paying stocks. This is because fundamentally strong companies maintain their payouts, irrespective of market volatility and economic conditions.
For example, investors could consider investing in shares of Fortis. This regulated electric utility company has been uninterruptedly growing its annual dividend payments for 50 years, making it one of the most reliable stocks to start a passive-income stream. Further, Fortis offers clear visibility over its future payouts, which is encouraging.
An equally attractive investment option is Enbridge. This energy infrastructure company has been distributing a dividend for over 68 years. Furthermore, it has increased its dividend at an annualized growth rate of 10% in the last 28 years.
These stocks have a solid payout history and are dependable bets to earn consistent passive income. However, here, I’ll focus on a dividend-paying stock that pays monthly cash and is trading cheaply.
Buying 542 shares of this cheap dividend stock could enable investors to earn over $1,000 in annual dividend income.
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One cheap dividend stock
The TSX has several stocks that offer monthly payouts. One could consider investing in SmartCentres Real Estate Investment Trust (TSX:SRU.UN). Investors should note that REITs (real estate investment trusts) own and manage income-producing real estate properties. Since they must distribute most of their earnings to shareholders, they are a popular choice for income investors.
SmartCentres is Canada’s largest fully integrated REIT. It owns a mixed-use portfolio of 189 properties strategically located in prime communities. SmartCentres has 34.9 million square feet of income-generating retail and premium office spaces.
Investors should note that SmartCentres REIT has a solid dividend payment history. Moreover, it maintains a high payout ratio, which exceeds 90%. It distributes a month of $0.154 per share, equating to a compelling yield of 8.28% (calculated based on its closing price of $22.35 as of October 5).
What makes SmartCentres a dependable passive-income stock?
SmartCentres benefits from its attractive real estate portfolio, high occupancy rate, and solid tenant base. While the company’s properties are in prime communities, its tenants are large corporations providing essential services. For instance, Walmart, Metro, and Dollarama are some of its top customers with a nationwide presence and resilient businesses.
Furthermore, SmartCentres boasts a high occupancy rate of about 98% and generates solid same-property net operating income, enabling it to enhance its shareholders’ returns.
With its solid tenant base, high occupancy rate, and mixed-use development pipeline, SmartCentres is poised to generate substantial operating income in the coming years. Moreover, most of SmartCentres’s debt is fixed, making the company relatively immune to the higher interest rate environment.
Bottom line
The factors above show that SmartCentres is a dependable passive-income stock. Furthermore, the table below shows that if you buy 542 shares of SmartCentres REIT right now, you can earn $83.17 in passive income every month, or $1,001.62 per year.
| Company | Recent Price | Number of Shares | Dividend | Total Payout | Frequency |
| SmartCentres REIT | $22.35 | 542 | $0.154 | $83.47 | Monthly |
While SmartCentres is a solid passive-income stock, investors must diversify their investments and not rely on one or two stocks.
