What is the worth of $140 a month? It could take care of your mobile and internet bill or your public transportation. Imagine having four to five sources of such $150 in passive income where the money comes to you without lifting a finger. Multiple passive-income sources can take care of your fixed overheads like food, utility, and transportation. This gives you time to pursue your passion without worrying about household expenses.
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How to build passive income
To make this imagination a reality, you need to work hard initially. Even when you open a business, the first few years are difficult and filled with losses and expenses. You need to set up a base, develop a loyal customer base, a resilient process, and keep checking the process from time to time. Only then will your business start generating money while you focus on your next venture.
Investment is like a business with relatively less effort. You invest your active income in businesses that generate cash flows and have a strong business model.
This top dividend stock can generate a good passive-income source
CT REIT (TSX: CRT.UN) is Canadian Tire’s real estate investment trust (REIT) that owns, develops, and maintains the retailer’s stores. The two are separate entities and the retailer pays rent to the REIT. The only advantage is that CT REIT gets the first opportunity to buy, build, and maintain the stores. The REIT’s fundamentals are strong as 99% of the $2.2 billion debt on its balance sheet is interest only.
Moreover, the REIT has assured occupancy from its parent, reducing the risk of the property staying vacant. It is among the few REITs that have been growing its distributions to unitholders annually as its rental income increases with rent hikes and new property additions.
Buy 1,386 shares for $140/month in passive income
Once you have read and understood the fundamentals, it is time to estimate the passive income CT REIT can generate. The next dividend hike will come in July 2025. If you invest $5,000 today, you can buy 314 units for $15.9 per unit.
The REIT is trading at a discount from its normal trading price of $16.5, as property prices corrected in the last two years. Assuming you invest in the dividend-reinvestment plan (DRIP), the monthly dividends will be used to buy more units of the REIT.
| CT REIT Stock Price | Year | Annual Investment | CT REIT DRIP Shares | CT REIT Share count | CT REIT Dividend per share (3% CAGR) | Total dividend |
| $15.90 | 2024 | $5,000.00 | 314.5 | 314.0 | $0.54 | $169.56 |
| $16.50 | 2025 | $1,169.56 | 70.9 | 384.9 | $0.93 | $357.94 |
| $16.50 | 2026 | $1,357.94 | 82.3 | 467.2 | $0.96 | $447.51 |
| $16.50 | 2027 | $1,447.51 | 87.7 | 554.9 | $0.99 | $547.49 |
| $16.50 | 2028 | $1,547.49 | 93.8 | 648.7 | $1.02 | $659.23 |
| $16.50 | 2029 | $1,659.23 | 100.6 | 749.3 | $1.05 | $784.26 |
| $16.50 | 2030 | $1,784.26 | 108.1 | 857.4 | $1.08 | $924.38 |
| $16.50 | 2031 | $1,924.38 | 116.6 | 974.0 | $1.11 | $1,081.62 |
| $16.50 | 2032 | $2,081.62 | 126.2 | 1100.2 | $1.14 | $1,258.37 |
| $16.50 | 2033 | $2,258.37 | 136.9 | 1237.1 | $1.18 | $1,457.37 |
| $16.50 | 2034 | $2,457.37 | 148.9 | 1386.0 | $1.21 | $1,681.81 |
There are seven more months until July 2025. This means that 314 units can earn you $169 in passive income at the current dividend rate. If you invest $1,000 annually over and above the DRIP for the next 10 years, your money could grow, as shown in the table. By the end of June 2035, you can start withdrawing $140 a month, which translates to $1,682 a year.
Investing tip
If you don’t need the money, let the investment compound. Because the longer you stay invested, the better the returns. However, it is suggested you keep reviewing the stock’s fundamentals as businesses have their ups and downs, and you should be assured that the stock can thrive.
