- Can you earn monthly income from stock market investing? Yes.
- Is there a way to earn more by investing less? Yes.
The stock market has something for every financial need.
Who doesn’t want to build a pipeline of cash flow whereby you can keep earnings without working? But to build that pipeline, one has to invest time and money. The sacrifice cost of today could give regular dividend income tomorrow.
In the stock market, you can build up a sizeable portfolio of income stocks from various sectors and build multiple income streams so that you have a backup if income from one stream falls.
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Passive income stocks that can give monthly dividends
Most dividend stocks give quarterly dividends. However, companies that deal with real estate have a higher probability of generating monthly dividends as they earn income every month.
Freehold Properties earns royalty payments from oil and gas producers for using its land. While the producers bear the cost of developing the land and closing the site, Freehold enjoys royalty payments based on the oil prices and production volume. While a steady source of income, its dividends fluctuate depending on oil demand and prices.
Short-term commercial mortgage provider Timbercreek Financial pays monthly dividends from the mortgage interest it earns. The interest may rise or fall depending on the Bank of Canada’s interest rate decisions. The company pays regular dividends but does not grow them.
Canadian Tire’s real estate investment trust CT REIT (TSX:CRT.UN) pays monthly distributions from the rent it collects from the parent. It also increases its dividend by 3% annually as leases renew at a 1.5% higher rent. Moreover, the REIT keeps buying and developing new stores for Canadian Tire. The REIT has managed to reduce its dividend payout ratio to 75% of the funds from operations as its rent increased faster than dividends.
If you are looking for a stable source of monthly income in the future that can beat inflation, CT REIT is a good option. It offers a dividend reinvestment plan (DRIP) and grows its dividends every year in July.
Here’s how many shares of CT REIT you should own to get $151 in monthly dividends
If CT REIT increases its dividend by 3% in July, its annual distribution until July 2026 will be $0.953. The REIT is currently trading at $14.73, slightly below its average stock price of $16.50.
If you invest $10,000 today, you can buy 674 units of CT REIT, which will pay an annual income of $642 by July 2026. The DRIP will use these monthly dividend payments to buy new units of CT REIT.
For ease of calculation, I used annual reinvestment in a DRIP. The actual amount may differ.
| Year | CT REIT DRIP Shares | Total Share Count | CT REIT Annual Dividend Per Share | CT REIT Annual Dividend Income |
| Jul-26 | 674 | $0.9530 | $642.18 | |
| Jul-27 | 39 | 713 | $0.982 | $699.65 |
| Jul-28 | 42 | 755 | $1.011 | $763.51 |
| Jul-29 | 46 | 801 | $1.041 | $834.61 |
| Jul-30 | 51 | 852 | $1.073 | $913.90 |
| Jul-31 | 55 | 907 | $1.105 | $1,002.51 |
| Jul-32 | 61 | 968 | $1.138 | $1,101.72 |
| Jul-33 | 67 | 1035 | $1.172 | $1,213.03 |
| Jul-34 | 74 | 1108 | $1.207 | $1,338.18 |
| Jul-35 | 81 | 1190 | $1.243 | $1,479.17 |
| Jul-36 | 90 | 1279 | $1.281 | $1,638.36 |
| Jul-37 | 99 | 1379 | $1.319 | $1,818.50 |
In 12 years, the DRIP could double your unit count to 1,379, assuming the REIT continues to grow dividends by 3% and the average cost per unit does not exceed $16.50.
The dividend per share could grow to $1.32 by July 2037 and provide an annual dividend of $1,818.50, which converts to $151.40 in monthly passive income.
Is there a way to earn more by investing less?
If you were to buy 1,379 units of CT REIT today, you would have to invest $20,313. A 12-year compounding would halve your investment amount to $10,000. Investing early has its benefits as it gives your money time to earn more money.
The $151 monthly income is from a one-time investment of $10,000. You can invest $7,000–$10,000 annually in different dividend stocks and let them compound over the years to build a regular source of income. Some lucrative dividend growth stocks can give you much higher passive income than CT REIT with quarterly payouts.
