Through dividend investing, anyone with money can become rich or make a fortune over time. This wealth-building strategy is best for income-focused investors, not day traders. Successful dividend investors donât chase soaring stocks but instead pick dividend payers that transform a small investment into long-term, regular income streams.
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An income stock
First National Finance Corporation (TSX: FN) in the financial services sector is a logical choice today. Besides its steady stock performance, the yield is generous, and the payout frequency is monthly. You hit two birds with one stone.
At $44.04 per share, current investors are up 21% year-to-date and partake in the 5.7% dividend yield. A $23,353 investment, or 528 shares, translates into a $110 monthly passive income. See the table below:
| Company | Recent Price | No. of Shares | Div Per Share* | Total Payout* | Frequency |
| First National | $44.04 | 528 | $2.50 | $1,320 | Monthly |
*The dividend per share and total payout are annual; the monthly payout is $110 (total payout divided by 12)
Collect the monthly dividends and reinvest them by buying more shares if you donât need the money yet. Assuming the yield is constant, your capital will nearly double or grow to $45,871 in 12 years. The monthly payout would be larger, or $217.
Business Overview
First National, a $2.6 billion non-bank mortgage finance company, operates across Canada. It offers single-family, multi-unit residential and commercial mortgages. First National Financial LP is the originator, underwriter, and servicer of mortgages in the residential and commercial segments.
The finance company does not accept or take in deposits but raises funds for mortgage lending from several sources, including institutional placements, asset-backed commercial papers, and the National Housing Act Mortgage-Backed Securities and Canada Mortgage Bonds (CMB).
Managementâs business strategy focuses on four key areas. First National provides a full range of mortgage solutions Canadians need while simultaneously growing assets under administration. The company leverages technology for business process enhancements and ease of service to mortgage brokers and borrowers. The last is to maintain a conservative risk profile.
First National considers its non-branch business model and proprietary information systems competitive advantages. However, the business is rate-sensitive. Real estate activity and mortgage volumes are generally low when interest rates are high. Falling interest rates are tailwinds because mortgage lending demand increases.
Positive development
In the three months ending September 30, 2024, net income declined 133.3% to $35.4 million compared to Q3 2023. At the quarterâs end, mortgages under administration (MUA) was $150.6 billion, 6% higher than a year ago. Fortunately, the Bank of Canada has reduced its policy rate four times since June 2024.Â
Due to these rate movements, its President and CEO, Jason Ellis, said single-family residential mortgage commitments in Q3 2024 increased by 50%. First National is also well-prepared to execute its business plan.
Strong dividend track record
First National has earned dividend aristocrat status after five consecutive years of dividend hikes. The recent increase was 2%. Moreover, in addition to uninterrupted monthly dividend payments since 2006, the Board declares a special dividend when the finance company generates excess capital from operations.
Invest in this dividend grower today if you want to earn monthly passive income soon with only a small amount of capital.
