Monthly Dividend Stocks: How to Create a Consistent Income Stream Worth $631

This monthly dividend stock is the best chance for those look for consistent and growing returns and passive income for life.

| More on:
Payday ringed on a calendar

Image source: Getty Images

The market may be recovering slightly, with the TSX today inching upwards as the second quarter comes closer for many companies. Yet it’s still a bit of a wild west out there, which is why monthly dividend stocks still seem so attractive.

But how does an investor get in on that monthly income and keep it? After all, monthly dividend stocks can also mean exposure to riskier investments. That’s why today we’re going to look at how to create that consistent income stream and create passive income through monthly dividend stocks that last.

Creating consistency

First off, let’s look at what investors should consider when looking for monthly dividend stocks. Investors should focus on companies with a strong track record of paying dividends. These companies typically have stable earnings, robust cash flows, and a history of weathering economic downturns. Sectors like utilities, consumer staples, and real estate often house such companies.

From there, diversify. Diversification is key to reducing risk and ensuring a steady income stream. By investing in a mix of industries and sectors, investors can protect their portfolios from sector-specific downturns. A diversified portfolio might include utility companies, real estate investment trusts (REITs), and consumer staple firms, all of which tend to offer reliable monthly dividends.

Now, to maximize growth and keep things consistent, investors should consider reinvesting dividends. Many companies offer dividend-reinvestment plans (DRIPs), allowing investors to automatically reinvest their dividends to purchase additional shares.

Now that the steps are there, here is perhaps the best option for investors on the TSX today.

NPI stock

Now, while I wouldn’t put all my investment into one stock, a great option if you’re only looking for one is Northland Power (TSX:NPI). NPI stock is well-positioned in the growing renewable energy sector. With a focus on wind, solar, and efficient natural gas projects, the company is poised to benefit from the global shift towards cleaner energy sources. This strategic positioning ensures long-term growth and sustainability.

Furthermore, NPI stock’s expansion into international markets, including Europe and Latin America, provides diversification and reduces reliance on any single market. This geographic diversification enhances the stability of its revenue streams and mitigates risks associated with market-specific downturns.

Furthermore, many of NPI stock’s projects operate under long-term contracts, providing predictable and secure cash flows. These contracts often include fixed pricing mechanisms, which protect against market volatility and ensure steady income.

The company has continued to provide strong financial performance during recent quarters, providing positive guidance and a healthy balance sheet. NPI stock now also offers a dividend yield of 5.12%, making it a steady dividend yield. What’s more, that dividend yield holds strong at a 77% payout ratio, still far and away higher than the five-year average of 3.75%.

Bottom line

So, if you’re looking for consistent dividend income, this is certainly your stock. In fact, considering both dividends and returns, you could earn massive income during the next year. The compound annual growth rate for NPI stock over the last decade has been 7.6% over the last five years. Here is what that could turn into through a $5,000 investment.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCYPORTFOLIO TOTAL
NPI – now$23.57212$1.20$254.40monthly$5,000
NPI – 7.6% increase$25.36212$1.20$254.40monthly$5,376.60

In total, you could create $376.60 in returns and $254.40 in dividend income. Altogether, that’s passive income of $631 in 2024 alone!

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 Amy Legate-Wolfe 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

Golden crown on a red velvet background
Dividend Stocks

Dividend Powerhouses: Canadian Stocks to Fuel Your Portfolio

These two top Canadian dividend aristocrats are some of the top stocks on the TSX to buy now and hold…

Read more »

Dial moving from 4G to 5G
Dividend Stocks

This Undervalued Dividend Stock is Worth Buying Right Now

Want an undervalued dividend stock with long-term potential and a juicy yield? Here's an option you may regret not buying…

Read more »

A worker gives a business presentation.
Dividend Stocks

1 Stock I’m Buying Hand Over Fist in July Despite the Market’s Pessimism

This top dividend stock is going through a rough patch, but don't let that count out all the growth we've…

Read more »

person on phone leaning against outside wall with scenic view at airbnb rental property
Dividend Stocks

2 TSX Stocks Poised to Have a Big Summer

Restaurant Brands International (TSX:QSR) stock and another darling that could be too cheap to ignore this summer.

Read more »

HIGH VOLTAGE ELECRICITY TOWERS
Dividend Stocks

Forget Fortis Stock: Buy This Magnificent Utilities Stock Instead

Looking for high dividends and returns? Then I'm sorry, but Fortis (TSX:FTS) stock probably isn't for you.

Read more »

Increasing yield
Dividend Stocks

2 High-Yield (But Slightly Risky) Stocks to Keep Your Eye on

Have these top TSX dividend stocks finally bottomed?

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks I’d Buy if They Fall a Bit

Any near-term decline in these two top Canadian dividend stocks will make them look even more attractive.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Got $3,000? 3 Dividend Stocks to Buy and Hold for the Long Term

You can buy these three Canadian dividend stocks with an investment as low as $3,000 right now and expect to…

Read more »