An investment of $50 appears low to start a passive income stream. However, a regular monthly investment of $50 in shares of dividend-paying companies over time can help you build a solid income portfolio to generate significant monthly income.
With this background, let’s look at the best dividend stocks to buy under $50. I have restricted myself to the stocks that offer a monthly payout.
SmartCentres Real Estate Investment Trust
Trading well under $50, SmartCentres Real Estate Investment Trust (TSX: SRU.UN) could be a solid addition to your portfolio for generating monthly income. This REIT (real estate investment trust) exhibits strong fundamentals supported by its high-quality assets and large unused land reserves. Further, its focus on enhancing shareholders’ value is positive.
SmartCentres currently offers a monthly dividend of $0.154 per share. This translates into a lucrative yield of about 8% based on its closing price of $23.05 on March 6. While it offers a high yield, its payouts are well-protected by its solid asset mix, high-quality tenant base, and attractive occupancy rate.
The firm owns 191 properties, including 155 retail properties. The company’s higher mix of retail properties drives its cash flows and occupancy rate, enabling it to bolster its shareholders’ return. Its tenants include top retailers, while SmartCentres REIT sports a high occupancy rate of 98.5%.
Its solid real estate portfolio, high occupancy rate, growing pipeline of mixed-use properties, and underutilized land bank present substantial growth opportunities. This will help SmartCentres to consistently return cash to its shareholders.
NorthWest Healthcare REIT
Investors could consider NorthWest Healthcare Properties (TSX:NWH.UN). Its stock has decreased by 54% in one year as the elevated interest rate environment took a toll on its finances and forced management to cut its dividend. Nonetheless, the company is taking measures to deleverage its balance sheet, exit non-core businesses, and focus on generating solid same-property net operating income, enabling it to enhance its shareholders’ return through regular monthly payouts.
It’s worth noting that despite the dividend cut, NorthWest Healthcare stock still offers a high yield of 8.9%.
Its high yield, defensive real estate portfolio of healthcare-focused assets, and high occupancy rate of 96% support my optimistic outlook. Further, its long average lease expiry term of 13.2 years and inflation-indexed rents add stability and enable the firm to grow organically.
Overall, its discounted share price, defensive portfolio of high-quality healthcare real estate, and high-quality tenant base with government funding position it well to return cash to its shareholders.
Pizza Pizza Royalty
Pizza Pizza Royalty (TSX: PZA) stock is an attractive investment for monthly cash. The firm franchises quick-service restaurants under the Pizza Pizza and Pizza73 brands. Further, Pizza Pizza Royalty stock offers a monthly dividend of $0.077 a share, which translates into a yield of 6.5% based on its closing price of $14.29 on March 6.
Pizza Pizza Royalty primarily earns its revenue through royalty income and prioritizes returning profits to shareholders through higher payouts. It’s worth highlighting that the firm distributes all of its available cash after maintaining prudent reserves, which makes it a lucrative income stock.
The company’s strategy of expanding its footprint and capitalizing on menu price increases positions it well to generate solid cash flow and pay higher dividends. Notably, it increased its monthly cash dividend three times in 2023, amounting to cumulative growth of 10.7%.
In summary, Pizza Pizza Royalty’s commitment to expanding its presence and rewarding shareholders with regular dividends makes it a compelling income investment option priced under $50.
