A passive income portfolio in the stock market is a basket of dividend stocks that generates regular cash flow streams. Investors with these baskets implement a buy-and-hold strategy, which requires little effort. Moreover, payout consistency is their priority, so any price appreciation or capital gain is a bonus.
Most TSX dividend stocks pay quarterly dividends but there are companies that pay every month. Modest dividends can attract even more investors because of the payout frequency. However, if you’re building a monthly passive income portfolio with $5,000, you can bulletproof it against market downturns.
The aging population and growing demand
Savaria Corporation (TSX:SIS) is a lucrative investment option if you’re paying attention to demographics, particularly the aging population. This $1.2 billion company manufactures accessibility and mobility products for older people, seniors, and physically challenged individuals.
The addressable market is growing due to the high demand from aging baby boomers. Besides the comprehensive products for home and commercial use, Savaria has products for the medical and long-term care markets. The reach of its dealership network is global, supported by manufacturing plants in Canada, the U.S., Mexico, Europe and China.
Savaria’s business thrives notwithstanding massive headwinds, including high interest rates and supply chain disruptions. In the first three quarters of 2023, total revenue (accessibility and patient care) and net earnings increased 7.5% and 11.8% year over year respectively to $620.1 million and $26.9 million.
Management credits the 7.1% organic growth in the Accessibility segment to the strong demand in North America’s residential and commercial sectors, and price increases. The new contracts with healthcare facilities during the period boosted the Patient Care segment.
On January 18, 2024, Savaria announced it would hold its first-ever Investor Day on April 9, 2024 in the Greater Toronto Area. “As Savaria has expanded significantly, we see an opportunity to introduce our global management team to the investment community known to Savaria and potential investors,” said Sébastien Bourassa, Savaria’s president and CEO.
Savaria’s dividend yield is decent and growing (a 10-year dividend growth streak). At $16.28 per share (+7.6% year to date), you can partake in the 3.19% dividend. The stock carries a buy rating, and market analysts’ 12-month average price target is $19.29.
Strong fundamentals, resilient portfolio
Most Canadian REITs pay monthly dividends but some real estate sub-sectors are more volatile than others. Slate Grocery’s (TSX:SGR.UN) competitive advantage is the strong fundamentals of its property portfolio. This $739.7 million REIT owns and operates grocery-anchored real estate (100%) in prime U.S. metro markets.
Its CEO, Blair Welch, reiterates, “Strong fundamentals in the grocery-anchored sector will provide further tailwinds as we seek to realize this growth and increase the overall value of our business.” Besides the built-in resiliency of the portfolio, leading grocers and tenants with strong credit ratings deliver durable cash flows.
Slate Grocery is a cash cow. At $12.51 per share (+4.44% year to date), current investors feast on the 9.28% dividend yield. A $5,000 investment transforms into $38.67 in monthly passive income.
Layer of protection
Savaria and Slate Grocery have no immunity from market volatility. However, the nature of the businesses gives a layer of protection to a passive income portfolio. The former has a captured and growing market, while the latter’s strong fundamentals can overcome macroeconomic uncertainties.
