If you’re interested in generating passive income, then investing in dividend stocks would be the easiest way for you to do that. Generally, dividend stocks have a much lower barrier to entry than other methods of passive income (e.g., real estate). In addition, unlike real estate, the income an investor would receive through dividend stocks is truly passive. Whereas real estate investments often require tenant management and labour.
In my opinion, if passive income is your goal, then you should be looking specifically at dividend stocks that pay shareholders on a monthly basis. This is because the dividends you receive would be more consistent than if you were investing in stocks that paid shareholders on a quarterly or annual basis.
In this article, I’ll discuss two great dividend stocks that pay shareholders monthly. I’ll also tell you exactly how much you need to invest in order to receive $500 in dividends every month.
This oil company would be a great pick
Pembina Pipeline (TSX:PPL) is the first company I’d recommend passive-income investors start looking at. For those that are unfamiliar, Pembina provides energy transportation and midstream services. To be specific, it operates three distinct business segments. This includes pipelines, facilities, and marketing. A very large player in the energy sector, Pembina is a component of the TSX 60. That confirms its status as a formidable company within the Canadian economy.
As of this writing, Pembina offers shareholders a monthly dividend of $0.6675. In order to receive $500 in dividends each month from Pembina stock, you would need to buy 750 shares. As of this writing, that would cost you $31,207.5. Although that may seem like a lot, Pembina stock offers investors a forward dividend yield of 6.53%, which is actually on the high end.
Balance out your portfolio with a renewable utility stock
There are a lot of people out there that think we should be moving away from the oil industry. This is largely due to the belief that oil usage is contributing to climate change. One way to balance out your portfolio if you do choose to invest in a company like Pembina is to also start buying shares of a renewable utility company. If that’s something you’re interested in, then consider Northland Power (TSX:NPI).
Northland Power offers investors a monthly dividend of $0.10 per share. Again, that may not seem like a lot, but investors are being treated to a forward dividend yield of 4.39% as of this writing. In my opinion, a sustainable dividend with a yield of anywhere from 3% to 6% is what passive-income investors should be striving for. In order to receive $500 in dividends each month, Northland Power investors will need to buy 5,000 shares. In this case, investors would need to spend $136,550 in order to receive the $500 of passive income they’re looking for each month.
