Passive Income: How Much Do You Need to Invest to Make $450 Per Month?

Do you want in on some passive-income action? Start with this top monthly income provider.

Amy Legate-Wolfe

Author Bio 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. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy 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. Social Media 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 January 28, 2025 8:00 pm EST

| More on: FC

Creating a reliable source of monthly passive income is an exciting financial goal, especially when you aim for a target of $450 per month. To achieve this, you need to focus on consistent dividend-paying stocks or other income-generating investments that offer stability and growth potential. Let’s explore the key considerations, why Firm Capital Mortgage Investment (TSX: FC) looks like a promising choice and its recent financial performance.

Paper Canadian currency of various denominations — Source: Getty Images

What to consider

First, it’s important to calculate how much you need to invest to generate $450 monthly. For simplicity, if you target a dividend yield of around 7.5%, you’d need to invest approximately $72,000 in dividend stocks. This calculation is based on the formula of multiplying your investment amount by the dividend yield and dividing it by 12. While $72,000 might seem daunting, consistent contributions and reinvestment of dividends can help you build this portfolio over time.

A key factor in choosing dividend stocks is stability. Look for companies with a solid track record of paying dividends, low payout ratios, and sustainable cash flow. Companies in sectors like real estate, utilities, and financials often provide dependable monthly payouts. Firm Capital Mortgage Investment Corporation is a strong candidate in this category. With its current dividend yield of 7.76% and a history of consistent payments, FC offers a blend of reliability and income potential.

Why Firm Capital?

Firm Capital specializes in real estate lending, providing short-term financing for residential and commercial projects. This niche gives it a steady stream of income from interest payments, which it distributes to shareholders as dividends. As of its most recent quarter, FC had a profit margin of 83.14% and a return on equity of 8.33%. These figures reflect its efficiency in generating profits and returning value to shareholders.

Recent financial results further bolster confidence in FC. The passive-income stock reported $41.38 million in revenue over the trailing 12 months, with net income of $34.4 million. Although its quarterly revenue saw a year-over-year decline of 29.2%, quarterly earnings grew by 4.3%, showing resilience amid challenges. Its high operating margin of 84.15% highlights the company’s ability to maintain profitability even during economic fluctuations.

The past performance also paints a reassuring picture. Over the past five years, FC has maintained an average dividend yield of 7.79%, demonstrating its commitment to rewarding shareholders. Its stock price has shown stability, with a 52-week range between $10.35 and $12.36. Currently trading around $12.01, it offers an attractive entry point for income-focused investors.

Looking ahead, Firm Capital’s future outlook is promising. Its focus on conservative underwriting and diversified real estate lending positions it well for navigating economic uncertainties. Moreover, its 94.93% payout ratio, while high, aligns with the typical structure of mortgage investment corporations that prioritize returning most earnings to investors.

Bottom line

For those seeking monthly passive income, the reliability of dividends matters as much as the yield itself. Firm Capital fits the bill with its strong financials, consistent dividend history, and promising outlook. By investing in such a passive-income stock, you can move closer to achieving your goal of $450 per month — all while enjoying the peace of mind that comes with a stable income source. So, let’s look at those dividends, shall we?

COMPANY	RECENT PRICE	NUMBER OF SHARES	DIVIDEND	TOTAL PAYOUT	FREQUENCY	TOTAL INVESTMENT
FC	$12.06	5,745	$0.94	$5,400	monthly	$69,284.70

In conclusion, building monthly passive income requires careful planning, disciplined investing, and choosing the right stocks. Firm Capital’s strong fundamentals and attractive dividend yield make it a compelling option for investors looking to create consistent monthly income. In fact, a $69,284.70 investment could create $5,400 annually, or $450 per year as of writing! Whether you’re just starting or already building your portfolio, adding a stock like FC could bring you one step closer to financial independence.