How to Build a Bulletproof Monthly Passive Income Portfolio With Just $10,000

The market turned bearish on dividend stocks. Now is the time to buy them at their dip and bulletproof your passive-income portfolio.

| More on:
protect, safe, trust

Image source: Getty Images

All investments carry an inherent risk. And when you talk about stocks, the risk is higher, even for safe stocks. After all, businesses that offer stocks are exposed to macroeconomic, regulatory, and company and industry risks. However, you can mitigate this risk and bulletproof your passive-income portfolio in three ways: 

  • Diversify your investments across sectors. 
  • Have exposure to contrarian stocks that move in opposite directions than the rest. 
  • Buy fundamentally strong stocks near their low. 

When you buy a stock at a cheaper price, the risk of a further downside reduces and the potential of an upside increases. Keeping all these things in mind, here are two stocks you could consider investing $10,000 right now.

Two dividend stocks for a bulletproof passive-income portfolio 

The unit price of CT REIT (TSX:CRT.UN) and Timbercreek Financial (TSX:TF) move in the same direction, but how they earn money has a contrarian impact on their distributions. 

CT REIT

CT REIT buys and manages stores of its parent, Canadian Tire, from which it earns more than 90% of its rent. Moreover, it has the first choice to acquire, develop, or intensify any Canadian Tire store. It also acquires any Canadian Tire stores owned by a third party. Since it doesn’t have to worry about finding and retaining tenants, it has an assured cash flow. With every new store added or intensified, its cash flow increases. It even increases its rent annually by 1.5%, ensuring stable growth. 

Because of the above catalysts, CT REIT is among the few REITs growing its distributions for the last 10 years by an average of 3%. Moreover, it has sustained its dividend-reinvestment plan (DRIP) at a time when many REITs suspended it. 

This model is robust but has one risk: too much dependence on Canadian Tire. If something happens to the parent company, the REIT could face the after-effects. It is also prone to high interest rates as it issues new debentures to pay off maturing debentures.

Timbercreek Financial stock

Timbercreek Financial benefits from higher interest rates since it lends short-term mortgages to commercial REITs. The lender enjoyed a full year of high interest income in 2023 and shared a portion of its profits with its shareholders through a special dividend in March. 

How to invest $10,000 today for a $121 monthly passive income 

Number of TF Shares @ $9.5Total TF SharesAnnual Payout at $0.690 Per ShareYearNumber of CT REIT Shares @ $16.5Total CT REIT unitsCT REIT Dividend per share (3% CAGR)Annual Payout
651.00651$449.1902024352.00 $0.898$316.166
27.22678.22$467.974202519.16371.16$0.925$343.379
28.36706.59$487.544202620.81391.97$0.953$373.511
29.55736.13$507.932202722.64414.61$0.981$406.934
30.78766.92$529.173202824.66439.27$1.011$444.074
32.07798.99$551.302202926.91466.19$1.041$485.421
33.41832.40$574.357203029.42495.61$1.072$531.535
34.81867.21$598.375203132.21527.82$1.105$583.068
36.27903.48$623.398203235.34563.16$1.138$640.767
37.78941.26$649.468203338.83601.99$1.172$705.502
39.36980.62$676.627203442.76644.75$1.207$778.280
Dividend income growth from DRIP of TF and CRT.UN.

TF is trading below $8, which means you can buy 651 shares for $5,000. The monthly payout from these shares will buy more DRIP shares of TF. (You can get less than one DRIP share.) I took a conservative estimate where the DRIP buys TF shares at its normal trading price of $9.5. The $5,000 investment can give you an annual payout of $676.6 by 2034, assuming TF maintains its dividends at $0.3690 per share.

  • We just revealed five stocks as “best buys” this month … join Stock Advisor Canada to find out if Enbridge made the list!

If you invest $5,000 in CT REIT now, you can buy 352 units for $14.16/unit. The DRIP can buy more units from the monthly payout. Moreover, if CT REIT continues growing its distributions by 3% annually, the incremental payout can buy more units, assuming the cost per share is $16.5. At the end of 2034, you could probably get $778 in annual passive income. The combined monthly passive income of the two stocks would be $121 [($778+$676.6)/12]. 

However, if you do not opt for DRIP and collect the payout, you can get $63 from April onwards. 

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 Puja Tayal has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Dividend Stocks

The Top Canadian REITs to Buy in April 2024

REITs with modest amounts of debt, like Killam Apartment REIT (TSX:KMP.UN), can be good investments.

Read more »

Technology
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

Some of the smartest buys investors can make with $500 today are stocks that have upside potential and pay you…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

2 Dividend Stocks to Buy in April for Safe Passive Income

These TSX Dividend stocks offer more than 5% yield and are reliable bets to generate worry-free passive income.

Read more »

protect, safe, trust
Dividend Stocks

How to Build a Bulletproof Monthly Passive-Income Portfolio With Just $1,000

If you've only got $1,000 on hand, that's fine! Here is how to make a top-notch, passive-income portfolio that could…

Read more »

Senior Couple Walking With Pet Bulldog In Countryside
Dividend Stocks

CPP Insights: The Average Benefit at Age 60 in 2024

The average CPP benefit at age 60 in average is low, but claiming early has many advantages with the right…

Read more »

thinking
Dividend Stocks

Why Did goeasy Stock Jump 6% This Week?

The spring budget came in from our federal government, and goeasy stock (TSX:GSY) investors were incredibly pleased by the results.

Read more »

woman analyze data
Dividend Stocks

My Top 5 Dividend Stocks for Passive-Income Investors to Buy in April 2024

These five TSX dividend stocks can help you create a passive stream of dividend income for life. Let's see why.

Read more »

investment research
Dividend Stocks

5 Easy Ways to Make Extra Money in Canada

These easy methods can help Canadians make money in 2024, and keep it growing throughout the years to come.

Read more »