There are many ways to earn monthly passive income in Canada, including real estate, rental properties, and side gigs. However, dividend investing stands out as one of the best options, largely because of its simplicity and a high degree of predictability.
Another beauty of this approach is that once you’ve carefully selected your dividend stocks, little day-to-day involvement is required. Unlike rental properties or most side gigs, which generally require constant management and time, investing in dividend stocks could allow you to focus on other priorities while your money works for you — making it one of the easiest methods for building a steady stream of passive income.
Earn $500 in monthly passive income from dividend stocks
To begin with dividend investing, it’s important to understand the concept of dividend yield. In simple terms, dividend yield could be defined as a percentage that represents how much a stock pays out in dividends to an investor relative to its share price.
For example, a stock trading at $100 per share with a 4% annualized dividend yield would pay $4 per share. So, if you hold 1,500 shares of that stock, you would receive $6,000 annually in dividends, translating to $500 per month. While a higher dividend yield means your upfront investment will be smaller, high-yield stocks often carry more risk as they might face challenges in sustaining those payouts, especially if their financial health starts to weaken. This is one of the key reasons why Canadian investors should focus on companies with a solid track record of stable earnings.
A top monthly dividend stock to buy now
Mullen Group (TSX: MTL) could be one of the most attractive monthly dividend stocks you can consider buying right now and holding for years to come. This Okotoks-headquartered logistics company currently has a market cap of $1.3 billion as its stock trades at $14.37 per share with nearly 2.4% year-to-date gains, underperforming the broader market. At this market price, Mullen offers an impressive 5.8% annualized dividend yield and distributes its dividend payouts every month.
Softer demand for logistic services amid the ongoing macroeconomic challenges has affected its business growth in recent quarters. Despite these short-term challenges, Mullen’s consistent focus on acquisition strategy and a potential recovery in logistics demand amid declining interest rates could provide the momentum the company needs to regain its growth trajectory in the long run. Considering that, it could be an attractive monthly dividend stock to buy now.
Here’s the math
To earn $500 per month, or $6,000 a year, in passive income from its dividends, you’ll need to buy 7,218 shares of Mullen stock. To buy this many shares at their current market prices, however, you would need to invest $103,723 in this company.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Mullen Group | $14.37 | 7,150 | $0.07 | $500.50 | Monthly |
| Prices as of Sep 25, 2024 |
While this example should give you an idea about how you can reach your passive-income goals even with a single dividend stock, keep in mind that diversification is really important when building a solid dividend portfolio. Relying too much on one stock could expose you to unnecessary risk, especially if the company faces unexpected challenges in the future.
