Did you know that monthly dividend stocks are like a steady paycheque for your portfolio? Unlike quarterly dividend stocks, which pay out four times a year, monthly dividend stocks reward you 12 times annually! This makes them a favourite for income-focused investors.
What’s even more exciting is that reinvesting those monthly dividends can lead to faster compounding growth. Imagine receiving dividends each month and using them to buy more shares. Your returns could grow quicker than with a stock that only pays out quarterly. It’s like adding fuel to the fire of your investment strategy, helping you reach your financial goals sooner.
ETFs could be best
A monthly dividend exchange-traded fund (ETF) on the TSX can be a great option if you’re looking for a steady income stream with the convenience of diversification. These ETFs pool together a variety of dividend-paying stocks, spreading out your risk while still delivering those sweet monthly payouts. It’s like having a basket full of goodies from different companies. So, even if one doesn’t perform well, the others can help balance things out. Plus, the consistent cash flow from monthly dividends can be especially appealing if you rely on your investments for regular income or if you’re planning to reinvest for quicker growth.
When choosing a monthly dividend ETF, there are a few key things to keep in mind. Look at the ETF’s yield. This will tell you how much income you can expect relative to your investment. Also, check out the expense ratio. A lower one means more of your money goes into your pocket rather than covering fees. Finally, consider the ETF’s holdings to ensure they align with your investment goals, whether you’re looking for stability, growth, or a bit of both. With the right pick, a monthly dividend ETF can be a solid, stress-free addition to your portfolio.
FIE ETF
iShares Canadian Financial Monthly Income ETF Common Class ETF (TSX: FIE) on the TSX is a strong choice for anyone looking to boost their monthly passive income. With a solid yield of 6.49% as of writing, it’s designed to deliver consistent payouts. This makes it a reliable option for those who want steady cash flow. Plus, with a portfolio heavily weighted towards financial services, including top Canadian banks, you’re investing in some of the most stable and reputable companies in the country. This ETF also benefits from diversification across bonds and real estate, adding an extra layer of security to your investment.
When considering the FIE ETF, it’s important to look at its low expense ratio and strong year-to-date return of 12.49%. These highlight its cost-effectiveness and performance. The ETF’s holdings in preferred shares and corporate bonds provide a balanced mix of income-generating assets. This can help mitigate risks associated with market volatility. If you’re after a dependable source of monthly income with the potential for growth, FIE offers a compelling blend of stability and return.
Bottom line
So, how much could you get from that $10,000 investment? Let’s say you see returns of another 12.5% and hold that 6.5% dividend yield. Here’s what it could look like a year from now.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | PORTFOLIO TOTAL |
| FIE – now | $7.43 | 1,346 | $0.48 | $646.08 | monthly | $10,000 |
| FIE – 12.5% | $8.36 | 1,346 | $0.48 | $646.08 | monthly | $11,252.56 |
In only a year, you could bring in returns of $1,252.56, with $646.08 in annual dividend income! Together, that’s $1,898.64 annually, coming out to a sweet monthly passive income of $158.22!
