For a Shot at $1,896 in Annual Passive Income, Buy 751 Shares of This TSX Stock

Passive income each year can come from a variety of methods. There’s of course the traditional method of using guaranteed income certificates (GIC). This is fixed income over usually a long period, and can bring in some serious income right now with higher interest rates. There’s also bonds, both from banks and corporations. Again, you can get fixed income from these sources as well.

Then there are dividend stocks. But here’s the issue with dividend stocks. That dividend can be cut at any time. And if it’s cut, suddenly the income you bet on isn’t there any more. Especially if you’re investing in a dividend stock for the dividend alone.

What to consider instead

So instead of just looking at a high dividend yield, which can be fairly easy to find, you need to dig deeper. Investors should seek out passive income stocks that offer passive income not just from dividends, but from returns as well.

This means looking likely at blue-chip companies, Dividend Aristocrats, and other companies that have proven their worth over the years. These are companies that have increased the dividend again and again, and are likely to do so in the future.

What’s more, look for companies that offer value on top of all this. So you want a solid dividend, a strong, long-term company that’s proven their worth, and value. That’s a huge list, but not one that’s impossible to find.

Seek out a sector

First off, try and find a sector that’s not doing well now, but should do well in the future. One of my favourites is to look at industrial stocks in the real estate investment trust (REIT) sector. These companies are high in demand, and yet low in stock price for the most part.

Industrial properties are the ones that provide an essential service to people around the world. The properties ship, store, and even assemble the products we demand on a daily basis, and want the next day. And yet many of these companies saw their shares shrink during the last two years.

And for good reason. Many of these passive income stocks soared high during the pandemic, when consumers had cash on hand. The thing is, these consumers then had to cut back with inflation and interest rates rising. And this caused revenue to fall, as well as share price.

So get in on a deal

This current economic situation, however, isn’t permanent. If you’re able to find a strong passive income stock in the industrial sector, grab hold of it! One I would consider right now is Dream Industrial REIT (TSX:DIR.UN).

DIR stock currently offers a 5.13% dividend yield at the time of writing, paid out monthly. Shares are on par with where they were a year ago, though have climbed 15% in the last three months. Shares trade at 0.84 times book value, with just 61.5% of equity needed to cover all its debts right now.

Now let’s say you invested $10,000 in DIR stock and saw shares return to 52-week highs. Here is what that could achieve in passive income this year.

And there you have it! You could create returns of $1,370.14 and dividends of $525.70. That’s a total of $1,895.84 in passive income! All from 751 shares of this rebounding stock.