Got $10,000? 1 Dividend Stock for $56 in Monthly Passive Income

This dividend stock is a great jumping-off point, but there are still a few considerations if you’re looking for safe monthly income.

| More on:
Pile of Canadian dollar bills in various denominations

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investing in dividend stocks can be a fantastic way to generate monthly passive income. Imagine having a steady stream of cash flowing into your account every month without much effort, allowing you to either reinvest the money or use it to cover everyday expenses. Dividend-paying stocks represent companies that share a portion of their profits with shareholders regularly, making them a popular choice for income-focused investors.

Created with Highcharts 11.4.3Crombie Real Estate Investment Trust PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Considering Crombie

When considering a dividend stock, it’s essential to evaluate a few factors. First, look at the dividend yield, which is the annual dividend payment as a percentage of the stock price. For instance, Crombie Real Estate Investment Trust (TSX:CRR.UN) currently offers a forward annual dividend yield of 6.69%, significantly above the market average. This indicates that for every $10,000 invested, you could potentially earn $669 annually, or about $56 monthly, in passive income.

Next, examine the payout ratio, which tells you how much of a company’s earnings are allocated to dividends. A high payout ratio, like Crombie’s 4,853.79%, may raise a red flag because it suggests the company is paying out more than it earns, possibly by leveraging debt or tapping reserves. However, consistently strong cash flow, such as Crombie’s $239.96 million in operating cash flow, can support high payouts sustainably.

Another critical consideration is the company’s financial health. Crombie’s total debt-to-equity ratio of 122.9% is relatively high, but its operating margin of 42.8% and profit margin of 23.68% demonstrate efficient operations. Investors should weigh these metrics against potential risks like rising interest rates, which could affect the cost of servicing debt.

Performance

The dividend stock’s past performance can provide valuable insights. Crombie has shown steady revenue growth, with a 4.1% year-over-year increase in the most recent quarter. Its five-year average dividend yield of 6.02% indicates consistent payouts, appealing to long-term investors. However, its recent quarterly earnings dropped by 4.4% year over year, highlighting the importance of monitoring trends.

Looking ahead, the future outlook for Crombie and similar dividend stocks depends on factors such as market demand, operational efficiency, and economic conditions. Real estate investment trusts (REITs) like Crombie often benefit from stable rental income, making them resilient in uncertain markets. Crombie’s diversified property portfolio and strategic partnerships position it well for steady cash flow.

A good start

Why $10,000 is a great starting point for dividend investing boils down to scalability and diversification. A lump sum allows you to buy enough shares of a stock to generate noticeable income. For example, with Crombie’s annual dividend rate of $0.89 per share, $10,000 could purchase approximately 758 shares at the current price of $13.18, earning you $675 annually.

Plus, investing $10,000 in dividend stocks can help you create a diversified portfolio. Instead of allocating the entire amount to a single stock, you could spread it across different sectors, such as real estate investment trusts, utilities, and financials. This diversification reduces risk and ensures a more stable income stream.

Bottom line

Ultimately, dividend investing is a balance of research, risk tolerance, and financial goals. With stocks like Crombie providing a mix of strong yields, reliable cash flow, and future growth potential, your $10,000 can become a powerful tool for generating monthly passive income. Just remember to revisit your portfolio regularly and reinvest dividends for compound growth — a strategy that can supercharge your wealth over time.

Should you invest $1,000 in Onex Corporation right now?

Before you buy stock in Onex Corporation, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Onex Corporation wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Canadian Red maple leaves seamless wallpaper pattern
Dividend Stocks

5 Canadian Dividend Stocks to Buy and Hold for the Next 20 Years

These Canadian stocks have paid dividends for decades, making them reliable investments to generate regular passive income.

Read more »

Dividend Stocks

3 Canadian REIT Stocks to Buy and Hold for the Next Quarter-Century

These three Canadian REITs trade cheaply and are highly reliable, making them some of the best stocks you can buy…

Read more »

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Dividend Stocks

1 Practically Perfect Canadian Stock Down 24% to Buy Now and Hold for Life!

CNR stock is a top Canadian stock for investors, especially with shares down on the TSX today.

Read more »

Canada national flag waving in wind on clear day
Dividend Stocks

The Best Canadian Stocks to Buy Right Away With $30,000

If you have $30,000 you're willing to invest, these are some of the first Canadian stocks to consider on your…

Read more »

rail train
Dividend Stocks

What to Know About Canadian Pacific Railway Stock for 2025

CP stock has now gone through a major merger, so what do investors have to look forward to?

Read more »

ways to boost income
Dividend Stocks

Top Canadian Value Stocks I’d Buy for Dividend Growth and Appreciation

If you are looking for income and capital appreciation, here are three Canadian value stocks for a great total return…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Canadian Stock to Buy With $2,000 Right Now

The company’s powerful combination of growth, income, and value, positions it well to deliver solid returns, making it a smart…

Read more »

Transparent umbrella under heavy rain against water drops splash background. Rainy weather concept.
Dividend Stocks

This 10.6 Percent Dividend Stock Pays Cash Every Single Month

Are you looking to invest for a rainy day? This 10.6% dividend stock pays cash every month, irrespective of the…

Read more »