Invest $9,000 in This Dividend Stock for $41.88 in Monthly Passive Income

This dividend stock has it all – a strong yield, a stable outlook, and the perfect way to create a monthly passive income stream

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published December 10, 2024 5:00 pm EST

| More on: DIR.UN

Investing $9,000 in a Tax-Free Savings Account (TFSA) can be a savvy move toward generating solid monthly passive income, especially when directed into dividend-paying stocks like Dream Industrial Real Estate Investment Trust (TSX:DIR.UN). Let’s explore how this strategy can work to your advantage and how to create some massive passive income.

Forklift in a warehouse — Source: Getty Images

DIR: A perfect dividend stock

First off, the TFSA is a Canadian gem for investors. Contributions grow tax-free, and withdrawals don’t incur taxes either. This means that any dividends or capital gains earned within the account aren’t subject to the taxman’s reach, allowing your investments to compound more effectively over time.

Now, let’s talk dividends. DIR.UN offers an attractive annual dividend of $0.70 per share at writing, yielding about 5.6%. This translates to a monthly payout of approximately $0.05833 per share. With a share price around $12.54, your $9,000 investment could acquire roughly 718 shares. This leads to an estimated monthly dividend income of $41.88. Not too shabby for a passive income stream!

COMPANY	RECENT PRICE	NUMBER OF SHARES	DIVIDEND	TOTAL PAYOUT	FREQUENCY	INVESTMENT
DIR.UN	$12.54	718	$0.70	$502.56	monthly	$9,000

DIR has demonstrated consistent financial performance. In Q3 2024, the dividend stock reported a 4% year-over-year increase in funds from operations (FFO) per unit, reaching $0.26. Net rental income also saw a 7.1% uptick, amounting to $90.5 million. These figures highlight the dividend stock’s robust operational efficiency and ability to generate steady income for investors.

More to come

The dividend stock’s portfolio is impressive, comprising 338 industrial assets totalling approximately 71.9 million square feet across key markets in Canada, Europe, and the U.S. This diversification helps mitigate risks associated with any single market and provides a stable foundation for income generation.

Looking ahead, DIR.UN’s management remains optimistic about growth prospects. Management has been actively engaging in capital recycling initiatives, selling non-core assets to reinvest in higher-yield opportunities. This strategy aims to enhance the quality of their portfolio and, consequently, the returns to investors.

Moreover, the industrial real estate sector is experiencing favourable trends. Companies like Prologis have reported increased earnings, citing a slowdown in new warehouse construction. This helps keep supply tight and supports rental rates. Furthermore, this environment bodes well for DIR.UN’s occupancy rates and rental income stability.

Bottom line

The bottom line here is that allocating $9,000 of your TFSA to a dividend-paying stock like DIR.UN can be a strategic move toward building a reliable passive income stream – one that could pay out $41.88 each and every month buying at these levels! And that’s without even including the other passive income coming in from returns.

The combination of tax-free growth, consistent dividend payouts, and the dividend stock’s solid financial performance makes it a compelling option for investors seeking steady income. As always, it’s prudent to conduct thorough research and consider your individual financial goals before making investment decisions. But this dividend stock certainly looks like a strong option for investors seeking long-term income that’s only due to rise higher. So certainly take a close look for your TFSA portfolio today.