The stock market continues to show signs of improvement, with the Dow Jones hitting record highs last week. This sent shares even higher, and perhaps will continue to do so. Or, perhaps not. Which is why finding a great dividend stock is still an excellent option these days.
But what if there are too many out there to choose from? Which will do well, and which won’t? That’s why today I’m going to focus in on a monthly dividend stock that pays cash every month. One that you don’t have to worry about for even a second.
High yield ETF
Instead of focusing on one dividend stock during this volatile time, consider a bunch of dividend stocks. What’s more, consider the best of the best! That’s what you get with the iShares Canadian Financial Monthly Income ETF (TSX: FIE).
FIE exchange-traded fund is an excellent option for numerous reasons. First off, it invests in some of the top Dividend Aristocrats on the TSX today. These dividend stocks have risen their dividend each year for at least the last five years in a row.
But there’s more. Even though these Dividend Aristocrats widely provide investors with quarterly dividend income, this ETF offers monthly income! So you get the benefit of the biggest and best stocks, while still bringing in monthly income.
There’s more
Not only does the FIE ETF focus on these dividend stocks, it also invests in other iShares ETFs. So you’re now getting exposure to a massive portfolio, all managed by a group of managers that are there to make sure you get paid.
And for those who have invested in this ETF, they’ve certainly been paid well. Year-to-date, shares are up about 11% as of writing. Yet it still offers value, trading at just 8 times earnings. And while shares have risen 13% in just over a month, they’re still down 6% from 52-week highs. So there is certainly gains to be made there.
But how much can you really gain from an ETF like this? Honestly, a lot. So let’s see where shares could go over the next year.
How much passive income is possible?
So now you’ve got a rebounding market, yet still also have an ETF that can provide you with secure income for the foreseeable future. It’s filled with strong dividend stocks including Big Six Banks and real estate investment trusts (REIT), and overseen by asset managers. These stocks are all due to continue rising as the market returns to normal.
In this case, let’s say you decide to use your Tax-Free Savings Account (TFSA) contribution room of $7,000. From there, we see shares return to all-time highs of $8.40 per share, currently trading at $6.80 per share. Here is how much you could learn in passive income including both returns and dividends from this dividend stock.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | PORTFOLIO TOTAL |
| FIE – now | $6.80 | 1,029 | $0.48 | $493.92 | monthly | $7,000 |
| FIE – highs | $8.40 | 1,029 | $0.48 | $493.92 | monthly | $8,643.60 |
As you can see, shares of this ETF should have no trouble reaching these all-time highs. With that would come $1,643.60 in returns, and $493.92 in annual dividend income. All together that’s total passive income of $2,137.52! And without so much of a breath of volatility.
