Passive Income: How Much Should You Invest to Earn $500 Every Month?

Earn $500 every month with these dividend-paying stocks.

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Investing in dividend stocks offers a dependable source of income. This is particularly advantageous for individuals who want extra cash to meet their financial needs. Furthermore, dividend-paying stocks also present an attractive opportunity for investors eying a reliable passive-income stream.

Besides offering quarterly payouts, there are companies that distribute dividends every month. This makes them attractive investments for income investors. 

With this backdrop, let’s explore a few fundamentally strong companies that offer monthly payouts. Further, an investment of $42K in these stocks can help you earn $500 every month. 

SmartCentres Real Estate Investment Trust

With a compelling yield of approximately 7.8% (based on its closing price on November 3), SmartCentres Real Estate Investment Trust (TSX:SRU.UN) is a solid option for individuals seeking reliable monthly income. The REIT (real estate investment trust) benefits from its attractive real estate portfolio and solid tenant base, factors which keep its occupancy rate high and enable the company to generate resilient AFFO (adjusted funds from operations), regardless of market conditions.

For instance, SmartCentres possesses a portfolio of 189 multi-use properties, including 155 retail properties. These assets are strategically located in prominent places throughout Canada. In total, SmartCentres has 34.9 million square feet of mixed-use space available for lease, which drives financial performance and stock price. 

It’s worth highlighting that 95% of its tenants are either nationally or regionally recognized retail brands. Moreover, 65% of its occupants offer essential services. As its tenants are stable and prominent players like Walmart and Loblaw, it allows SmartCentres to generate solid organic growth and facilitates it to maintain a high occupancy rate. Notably, SmartCentres has an industry-leading occupancy rate of approximately 98.2%, which adds visibility over its future AFFO generation capabilities and supports dividend payouts. 

Looking ahead, SmartCentres’s extensive multi-use properties, with more emphasis on retail (the demand for properties offering higher traffic remains high) and industry-leading occupancy rate, position it well to generate solid AFFO. Moreover, its solid balance sheet and higher percentage of fixed-rate debt will help the company to navigate the current challenges well. In summary, SmartCentres is a solid stock to earn stable monthly cash. 

Pizza Pizza Royalty

Pizza Pizza Royalty (TSX:PZA) presents an enticing opportunity for investors looking for regular monthly income. The company’s primary focus is on owning and franchising quick-service restaurants. Currently, it operates under two well-recognized banners: Pizza Pizza and Pizza73.

Notably, Pizza Pizza Royalty generates revenue through royalty income, with a strong commitment to return solid cash to its shareholders through dividend payments. Remarkably, the company focuses on distributing all of its available cash to shareholders once reasonable reserves have been retained. This makes it a solid income stock. 

Investors should note that an integral part of the company’s success lies in the ability of its brands to sustain and enhance traffic. Moreover, it also benefits from adjusting menu prices as needed. This strategy has enabled Pizza Pizza Royalty to earn substantial royalty income and grow its dividend substantially over the past year. Furthermore, the company focusing on expanding its restaurant network, which bodes well for its long-term growth. Pizza Pizza Royalty currently offers a lucrative dividend yield of 6.5%.  

Make $500 per month

Both SmartCentres and Pizza Pizza Royalty are solid dividend stocks providing monthly distributions. In addition, these stocks offer compelling yields near the current levels. The table shows that an investment of $42K in each of these stocks can help you earn $500 every month. 

CompanyRecent PriceNumber of SharesDividendTotal PayoutFrequency
SmartCentres Real Estate Investment Trust$23.641,777$0.154$273.66Monthly
Pizza Pizza Royalty Corp$13.853,032$0.075$227.40Monthly
Price as of 11/03/2023

While these stocks are dependable bets, I’d recommend that investors diversify their portfolios and not invest their entire savings into one or two stocks. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool recommends SmartCentres Real Estate Investment Trust. The Motley Fool has a disclosure policy.

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