If you’re looking to save for retirement, now could actually be the best time. No, really! That’s simply because the stock market is down so low, offering a huge opportunity for passive income. So much so that within a few years, you could certainly create monthly passive income of $1,000 per month.
How? Let’s get right into it.
Set yourself up for success
First off, you need to start thinking long term. To do that, you have to be prepared, with goals in mind and a budget that offers you enough cash on hand to invest regularly. Ideally, you’ll have something like a Tax-Free Savings Account (TFSA).
The TFSA is ideal here because it offers investors the opportunity to grow passive income, tax free. No Canada Revenue Agency (CRA) knocking at your door looking for cash from your gains. Plus, you won’t get dinged by taking out cash early. In fact, you could take it out whenever you want! So if an emergency happens, you won’t have any concerns.
Meanwhile, you can make automated contributions each month, quarter, or whenever towards your goals. By doing this, you’ll create a large amount of cash on hand to use as purchasing power towards your retirement goals.
Why now is the time
The TSX today remains down, and that sucks. However, a bull market always follows. Over time, the market goes up, and that’s not suddenly going to change unless the world pretty much implodes. So with that in mind (and no evil doers hopefully planning out the demise), investing in the market now is ideal.
With the TSX today now near 52-week lows, it’s a great time to get into the market for huge returns. Especially if you’re looking for a dividend stock. There are solid dividend stocks that may not do well now, but certainly will when a bull market comes. So you’ll get dividend income now, and future returns when we return to normal.
What to choose
If you’re going to choose a dividend stock for long-term gains and monthly passive income, you need a monthly income stock. A great option these days in my view would be a company such as Granite REIT (TSX:GRT.UN).
Granite stock offers you monthly passive income with a dividend yield currently at 5.02%. That’s already higher than the five-year average yield. From there, shares of Granite stock are down about 10% in the last year. So you’re looking at quick gains when shares return to normal.
Furthermore, Granite stock is in a strong and growing industry. Namely, the industrial sector. Warehouses, assembly areas, storage and shipping are all major parts of this growing industry, thanks to ecommerce demands. With quick turnarounds, more and more of these properties are needed, which is why Granite stock has expanded so much, so quickly! This hasn’t stopped, despite shares dropping. Which is why it’s a great buy on the TSX today.
Bottom line
So if you’re looking at $1,000 in monthly passive income, remember you can include both dividend income and returns. This would mean creating $12,000 in passive income each and every year. It’s far easier to invest early and wait, but here is what you would need to invest if you’re looking at creating this amount in the next year and shares return to 52-week highs.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | PORTFOLIO TOTAL |
| GRT.UN – now | $64 | 469 | $3.20 | $1,500.80 | monthly | $30,000 |
| GRT.UN – highs | $89 | 469 | $3.20 | $1,500.80 | monthly | $41,741 |
As you can see, investing $30,000 now and seeing it grow to 52-week highs would create returns of $11,741. Add in the $1,500.80 from dividends and that’s total passive income of $13,241.80! That’s over $1,000 per month, adding up to $1,103.48 each month.
