One of the best and often dismissed ways to build a large nest egg is to invest early and frequently. This is a painless and often easy way to generate monthly income over the long term. Even better, many of these best dividend stocks are under $50.
Here’s a look at some of these under $50 best dividend stocks to add to your portfolio today.
Start with a reliable income stream
One of the tried and tested ways of establishing a monthly income stream is through a rental property. Unfortunately, those plans changed for would-be landlords when interest rates shot up.
Add in still-rising home prices, and you have a situation in which setting aside $200,000 or more for a downpayment is recommended.
Let’s start with a lower investment, say $50 every month.
For that outlay, prospective investors can opt for several shares of RioCan Real Estate (TSX: REI.UN). RioCan is one of the largest real estate investment trusts (REITs) in Canada, with nearly 190 properties scattered across the country. A growing number of those properties are classed as mixed-use residential.
Those properties are situated along transit corridors in high-demand metro areas. For investors, they are a lower-risk option compared with owning a single-property rental unit.
This is thanks to several key, yet often overlooked reasons. First, any risk is spread out over hundreds of units. The initial outlay for investors is much lower than the downpayment example noted above. And finally, there are no tenants or mortgage payments to worry about.
As of the time of writing, RioCan trades just over $17 per share. This means that investors who spend just $50 on RioCan will add nearly three shares each month. Once purchased, those shares will begin to generate passive income, which is paid out monthly. Remember that if you don’t need to draw on that income, it can be reinvested for further growth.
RioCan’s distribution currently offers a yield of 6.33%. For a larger investment such as $40,000, that translates into over $200 each month in passive income. Prospective investors looking for dividend stocks under $50 should keep in mind that RioCan is a long-term investment.
In short, buy it, hold it, reinvest those distributions, and, like a landlord, watch your nest egg grow.
How about a diversified passive-income stream
Another option for investors looking for the best dividend stocks under $50 to consider is Exchange Income Corporation (TSX: EIF).
Winnipeg-based Exchange owns over a dozen subsidiary companies that are broadly classified into the aviation and manufacturing segments.
Both segments boast a variety of companies that serve a specific need in a market where there is limited competition. This niche helps them to generate free cash while also providing some defensive appeal.
By way of example, on the aviation side, Exchange’s subsidiaries include a flight school as well as medevac and passenger service to Canada’s remote north. Turning to the manufacturing side, Exchange’s subsidiaries include cell tower construction and window-wall fabrication services.
Exchange offers investors a juicy monthly dividend that currently carries a yield of 5.63%. As with RioCan, investing in Exchange should be seen as a long-term play. As of the time of writing, Exchange trades just over $46.
Prospective investors looking for the best dividend stocks under $50 should also note that Exchange has provided annual upticks to its dividend in 17 of the last 19 years. This fact alone makes the stock a great buy-and-forget candidate.
The best dividend stocks under $50 for your portfolio
All stocks, even the most defensive options, can carry some risk. Both Exchange and RioCan offer some defensive appeal and, in my opinion, would do well as part of any larger, well-diversified portfolio.
