It’s no secret that only earning money doing a job will not cut it to meet your expenses, fund a good lifestyle, or leave enough for decent savings for a comfortable retirement. Creating a passive income stream to supplement your primary income is the way to go, no matter where you are in the world. Fortunately, Canadians have plenty of ways to create a good passive income stream.
Building a portfolio of dividend stocks can be an excellent strategy. Dividend stocks make payments to shareholders, funded by any extra cash the underlying company can spare. Most TSX stocks pay shareholders their dividends every quarter, but there are dividend stocks with monthly schedules.
Today, I will discuss three TSX dividend stocks that pay investors on a monthly schedule that you can consider investing in to set the foundations of a good passive income portfolio.
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SmartCentres REIT
SmartCentres REIT (TSX: SRU.UN) is a $4.3 billion market-cap Real Estate Investment Trust (REIT) with a portfolio of commercial and residential properties in communities across Canada. The company develops complete, connected, and mixed-use communities on its retail properties. If you are interested in making monthly income like a landlord but don’t have the cash to spend on investing in an entire property on your own, REITs are as close as you can get through the stock market.
REITs pay investors through rental income, and SmartCentres generates steady and stable income. Canadian Tire and Walmart are two of the top retailers with long-term leases among its tenants, reflecting a strong tenant base. As of this writing, SmartCentres REIT trades for $23.89 per share and pays its investors $0.1542 monthly. Its diversified revenue streams, long-term leases, and strong tenant base make it an appealing hold for long-term passive income.
Freehold Royalties
Freehold Royalties Ltd. (TSX: FRU) is another reliable monthly dividend stock you can own, but it operates in an entirely different industry. The $1.8 billion market-cap company acquires and manages oil and gas royalties. Its Canadian business segment includes exploration and evaluation assets and natural gas and petroleum interests in Western Canada. The US segment includes natural gas and petroleum interests in several parts of the country.
The company doesn’t perform any drilling itself. Rather, it generates steady income by letting other energy companies operate on its properties and take a cut of the income. This business model translates to steady cash flows for Freehold Royalties. While its revenue can drop when energy prices decline, it is growing its exposure in the US to shift toward higher-value oil production. As of this writing, it trades for $10.86 per share and pays its investors $0.09 per share in monthly dividends.
Sienna Senior Living
Sienna Senior Living Inc. (TSX: SIA) is a $1.5 billion market-cap company that owns and operates a network of senior housing. It is one of the largest companies in this industry in Canada and the biggest licensed long-term care operator in Ontario. There is no shortage of demand for space in senior living homes, and Canada’s aging population keeps increasing its occupancy. Solid operational improvements have also helped the stock perform better and better.
The company is continuing its focus on expanding its operations, with over $300 million allocated for development projects and $81 million in new acquisitions. As of this writing, the stock trades for $15.76 per share, and it pays its investors $0.078 per share every month.
Foolish takeaway
By creating and growing a sizeable portfolio of the top monthly dividend stocks, you can set yourself up for substantial extra income. You can choose to reinvest the dividends to unlock the power of compounding and accelerate your growth. When the income is significant enough, you can use that money to handle expenses. Creating such a portfolio in a Tax-Free Savings Account (TFSA) can help you enjoy the income without incurring taxes.
