200 Shares of This Company Will Generate $60 Every Month

As of this writing, the S&P/TSX Composite Index has declined by 4.28% between September 20 and October 20, 2023. The fears of further interest rate hikes by the Federal Reserve south of the border and Bank of Canada at home as inflation persists have weighed on equity markets.

The decline in the Canadian benchmark index highlights the negative impact of rising interest rates on the economy. As bad as a volatile market is, such measures are necessary to control inflation. Inflation hit 8% in Canada during 2022, cementing the need for precautionary measures.

While inflation has cooled to 3.8%, it is still far off from the 2% target range. Canadians can be in for more economic pressure through further interest rate hikes in the near future.

Given the uncertain outlook, Canadian investors can look to earn a stable passive income by adding dividend-paying companies to their self-directed investment portfolios.

While share prices might be volatile, reliable dividend stocks continue paying shareholders their dividends, aided by strong balance sheets and healthy cash flows. That said, not every high-yielding dividend stock is a reliable investment to this end.

If you are a long-term investor looking to set yourself up with a long-lasting passive income stream, you must pick and choose high-quality dividend stocks to add to your portfolio. To this end, we will discuss one Canadian dividend stock that might fit the bill perfectly.

A dividend stock with a long dividend growth history

Investing in any publicly traded company paying high-yielding dividends is not enough. To make it a truly worthwhile investment, it is better to allocate money to stocks that also grow payouts at least once a year while maintaining their track record. To this end, Canadian Natural Resources Ltd. (TSX:CNQ) can be a great fit to consider.

A stock with a long legacy of strong dividend growth, Canadian Natural Resources stock has raised its dividends annually for the last 23 years. In this period, it has grown its payouts by a compounded annual growth rate (CAGR) of 21%, representing a significant increase in shareholder value.

Granted, it is a cyclical energy stock. Still, the company’s solid portfolio of low-decline and long-life assets puts it in a good position to continue yielding great results. With a 10% free cash flow yield at oil prices of US$85 per barrel, it can still generate positive cash flows at US$40 per barrel.

Currently, the oil and natural gas major possesses over 40 years’ worth of reserves, meaning it looks well-positioned to grow shareholder value for at least four decades.

Foolish takeaway

As of this writing, Canadian Natural Resources stock trades for $91.15 per share. At these levels, it offers shareholders quarterly payouts at a juicy 3.95% annualized dividend yield. Hypothetically, buying 200 shares of the company at current levels can mean earning $180 every quarter, translating to $60 per month in passive income.

While you should never allocate so much money to just one stock, this example paints a clear picture of how you can use dividend investing to generate extra monthly income.