Passive Income: How Much Should You Invest to Earn $1,000 Every Month?

Given their stable cash flows and high dividend yields, investors can buy these three stocks to boost their passive income.

| More on:

Yesterday, Statistics Canada announced that Canada’s inflation fell to 2.8% in June, the lowest in the previous 27 months. The decline in gasoline and telecommunications services prices eased inflationary pressure. However, food and mortgage expenses continue to rise, with food prices increasing by 9% compared to the previous year’s month. Food prices have almost increased by 20% in the last two years.

With rising prices creating a deeper hole in your pocket, investors should look to earn a stable and reliable passive income to lower the impact of inflation. Meanwhile, investing in high-yielding dividend stocks is one of the convenient ways to make a steady passive income. Here are three top monthly-paying dividend stocks that could boost your passive income.

Pizza Pizza Royalty

Pizza Pizza Royalty (TSX:PZA) would be an excellent dividend stock to have in your portfolio due to its stable cash flows and high dividend yield. The company operates a  franchised restaurant business, collecting royalty from its franchisees based on their sales. So, rising prices and wage inflation will not impact its financials. Meanwhile, increasing menu prices to compensate for rising expenses in this inflationary environment could boost its royalty income.

Amid its solid financials, PZA’s management has raised dividends seven times since April 2020. Currently, it offers a monthly dividend of $0.075/share, with its yield for the next four quarters standing at 5.98%. Additionally, the company has planned to increase its restaurant count by 3-4% this year. The company’s strong value messaging and promotional activities could continue to drive its same-store sales growth. So, I believe the company is well positioned to continue paying dividends at a healthier rate, making it an attractive buy.

NorthWest Healthcare Properties REIT

Second on my list is NorthWest Healthcare Properties REIT (TSX:NWH.UN), which pays a monthly dividend of $0.06667/share, with its forward yield at 11.85%. The real estate investment trust, which focuses on acquiring and managing healthcare properties, has been under pressure over the last few months amid weak quarterly performances. A temporary increase in its leverage and rising interest rates weighed on its financials.

Meanwhile, the company has taken several deleveraging initiatives, such as selling non-core assets and lowering its stake in the United States and United Kingdom joint ventures. These initiatives together can generate $550-$600 million, which the company will utilize to pay off high-interest-bearing loans. The company’s defensive healthcare portfolio, long-term lease agreements, and government-backed tenants provide stability to its financials, allowing it to pay dividends at a healthy rate.

Whitecap Resources

Oil prices have bounced back strongly over the last few weeks amid improving market conditions, with inflation in the United States slowing down to 3% in June. Oil prices have increased by over 15% from last month’s lows. Higher oil prices could benefit oil-producing companies, including Whitecap Resources (TSX:WCP).

In April, the company posted an impressive first-quarter performance, generating $448 million in fund flows. By removing capital expenditures of $254 million, the company had $194 million in free fund flows. Supported by the proceeds from the disposition and excess fund flows, the company lowered its net debt by around $400 million during the quarter to $1.47 billion. The company’s management has stated that it would return 75% of its free fund flows to shareholders upon lowering its debt to below $1.3 billion.

Meanwhile, the company has planned to make a capital investment of $900-$950 million this year, boosting its production. The company hopes to increase its output by 12% to around 160,000-162,000 barrels of oil equivalent per day this year. Higher production and favourable oil prices could support its financial growth. So, the company’s outlook looks healthy.

Meanwhile, Whitecap Resources pays a monthly dividend of $0.483/share, with its forward yield currently at 5.8%. Given its healthy growth prospects and solid cash flows, I believe the company’s payouts are safer.

COMPANYRECENT PRICENUMBER OF SHARESINVESTMENTDIVIDENDTOTAL PAYOUT (MONTHLY)DIVIDEND FREQUENCY
PZA$15.063,452$51,987$0.075$258.90Monthly
NWH$6.757,703$51,995$0.06667$513.56Monthly
WCP$9.995,205$51,997$0.0483$251.40Monthly
TOTAL$155,980$1,023.86

Investors takeaway

If you invest around $52,000 in each of the following three monthly-paying dividend stocks, you can earn over $1,000 every month. You can also benefit from the capital appreciation.

This example only provides a fair idea to investors about earning a monthly passive income of $1,000. However, investors should not invest large amounts in just a couple of stocks. Instead, they can diversify to lower their risks.

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 Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends NorthWest Healthcare Properties Real Estate Investment Trust and Whitecap Resources. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Is CNR Stock a Buy, Sell, or Hold for 2025?

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

These top dividend stocks both offer attractive yields and trade off their highs, making them two of the best to…

Read more »

Middle aged man drinks coffee
Dividend Stocks

Here’s the Average TFSA Balance at Age 35 in Canada

At age 35, it might not seem like you need to be thinking about your future cash flow. But ideally,…

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Invest Your $7,000 TFSA Contribution in 2024

Here's how I would prioritize a $7,000 TFSA contribution for growth and income.

Read more »

a man relaxes with his feet on a pile of books
Dividend Stocks

CPP Pensioners: Watch for These Important Updates

The CPP is an excellent tool for retirees, but be sure to stay on top of important updates like these.

Read more »

Technology
Dividend Stocks

TFSA Investors: 3 Dividend Stocks I’d Buy and Hold Forever

These TSX dividend stocks are likely to help TFSA investors earn steady and growing passive income for decades.

Read more »

four people hold happy emoji masks
Dividend Stocks

Love Dividend Growth? Check Out These 2 Income-Boosting Stocks

National Bank of Canada (TSX:NA) and another Canadian dividend-growth stock are looking like a bargain going into December 2024.

Read more »

An investor uses a tablet
Dividend Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock may seem like the best of the best in terms of dividends, but honestly this one is far…

Read more »