The allure of a regular dividend check dropping into your account every month is undeniably appealing. Imagine that reliable stream of passive income effortlessly supplementing your financial needs.
But, like all good things in the world of finance, there are constraints and considerations. For starters, the majority of dividend-paying stocks distribute their rewards only once a quarter.
Moreover, placing all your passive income hopes on a single stock, or even a handful, can be a risky gamble. Market fluctuations, company-specific issues, or broader economic challenges can dent your dividend dreams.
Today, I’ll spotlight three exchange-traded fund (ETF) options that not only distribute dividends on a monthly basis but also boast above-average yields: real estate investment trusts (REITs), a collection of solid Canadian dividend stocks, and an interesting play involving covered calls on Canadian banks.
Ready to find out just how much you need to invest in each to achieve that coveted $500 monthly dividend? Keep reading to find out. Keep in mind that these calculations are an approximation and do not account for the effect of possible taxes and trading costs.
REIT ETF
My pick here is BMO Equal Weight REITs Index ETF (TSX: ZRE). This ETF holds 22 Canadian REITs in equal allocations and pays out a 5.53% annualized distribution yield as of September 30, 2023.
To receive around $500 every month in dividends from ZRE, an investor would have to invest $108,600.25, assuming the current monthly payout and share price as of October 6, 2023, remains consistent:
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| ZRE | $19.15 | 5,555 | $0.09 | $499.95 | Monthly |
Dividend ETF
My pick here is BMO Canadian Dividend ETF (TSX: ZDV). This ETF holds 52 Canadian dividend stocks weighted by yield and pays out a 4.62% annualized distribution yield as of September 30, 2023.
To receive around $500 every month in dividends from ZDV, an investor would have to invest $127,716.84, assuming the current monthly payout and share price as of October 6, 2023, remains consistent:
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| ZDV | $17.88 | 7,143 | $0.07 | $500.01 | Monthly |
Covered call ETF
My pick here is BMO Covered Call Canadian Banks ETF (TSX: ZWB). At present, this ETF holds all six big Canadian bank stocks in equal weights with a covered call overlay to generate income and pays out a 7.93% annualized distribution yield as of September 30, 2023.
To receive around $500 every month in dividends from ZWB, an investor would have to invest $67,797.09, assuming the current monthly payout and share price as of October 6, 2023, remains consistent:
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| ZWB | $16.27 | 4,167 | $0.12 | $500.04 | Monthly |
