Earn $100 Monthly With a Simple $17,025.75 Investment

A less than $20,000 investment in a high-yield energy stock can produce $100 every month.

| More on:

The Canadian stock market has gained 11.03% since November 2023 due to mild bull rallies and moderating inflation. Going into the last week of May 2024, the TSX is up 6.5% year to date, led by the energy sector’s +22.11%. Market analysts believe rate cuts will drive dividend expansion.

A report by S&P Global Market Intelligence Dividend Forecasting (S&P Global MI DF) in January said that regular base dividend payouts would grow by an average of 6% year over year, with more than 50% coming from heavyweight sectors such as banking and energy. 

Bank of Nova Scotia and Whitecap Resources (TSX:WCP) are among the top picks for their generous dividend yields. However, most income-focused investors would find the energy stock more appealing for three reasons: lower share price ($10.35 vs. $65.27), higher yield (7.05% vs. 6.5%), and payout frequency (monthly vs. quarterly).

Furthermore, Whitecap is up 19.64% year to date compared to +4.46% for BNS. Whitecap’s current dividend yield is exceedingly higher than the 4.7% industry average. But is the generous payout sustainable? Given the 57.9% payout ratio (BNS is 68.9%), it should be.

Created with Highcharts 11.4.3Whitecap Resources PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Potential earnings on a simple investment

Frequent dividend payments attract more income investors. Besides the steady income streams you can incorporate into your monthly budget, you can reinvest the dividends 12 times a year instead of four for faster principal compounding.

With Whitecap Resources, a $17,025.75 investment (1,645 shares) transforms into a $100.03 monthly passive income. Assuming you don’t collect the dividends but reinvest them, your money will more than double to $34,386.50 in 10 years. The total dividend earnings of $17,360.75 represents a 101.97% money growth through the power of compounding.     

Operations

The $6.2 billion oil-weighted growth company operates in northwest Alberta (West division) and central Alberta (East division). Whitecap’s light oil resource base is the foundation for growth, while the portfolio of assets (petroleum and natural gas) delivers predictable cash flows. The low-decline light oil asset base also supports an internally funded business model.

Whitecap’s exploration and production activities focus on the Western Canadian Sedimentary Basin, competing with several companies of various sizes. Identifying, finding, and developing oil and gas reserves at economical costs and marketability of the oil and gas produced are perennial risks.

Other business risks are the demand for oil and gas in North America, commodity prices, and currency exchange rates. 

Production and financial highlights

Whitecap had an exceptional first quarter (Q1) of 2024, production-wise, owing to the record average production of 108,210 barrels per day (bbls/d) of light oil and liquids and 368,701 thousand cubic feet per day (mcf/d) of natural gas. Management said it was the most active quarter in the company’s history and expects the divisions to outperform in Q2.

In the three months ended March 31, 2024, total revenues and net income declined 1.7% and 77.2% year over year to $868.3 million and $59.8 million. Nevertheless, the balance sheet remains strong due to the downside price protection. The total dividend payments of $109 million were 24% higher than in Q1 2023.

Buy rating

Management is confident and comfortable about the sustainability of the current monthly dividend despite the constant stress on commodity prices. The commercial operation of the expanded TMX pipeline beginning in May 2024 is a tailwind. Market analysts recommend a buy rating for Whitecap Resources.

Should you invest $1,000 in Cenovus Energy right now?

Before you buy stock in Cenovus Energy, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Cenovus Energy wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,345.77!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*.

See the Top Stocks * Returns as of 4/21/25

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Bank Of Nova Scotia and Whitecap Resources. The Motley Fool has a disclosure policy.

More on Dividend Stocks

trends graph charts data over time
Dividend Stocks

The Smartest Income Stocks to Buy With $5,000 Right Now

Do you want to increase your dividend income? Check out these three smart Canadian income stocks for a long-term hold.

Read more »

An investor uses a tablet
Dividend Stocks

Where I’d Invest $9,500 in the TSX Today

Take a closer look at these two oil and gas sector giants if you’re seeking reliable long-term investments to hold…

Read more »

Dividend Stocks

The Best Canadian Stocks to Buy Right Away With $30K

Do you have $30,000 sitting there doing nothing? Then you need to invest in Canadian stocks like these!

Read more »

Muscles Drawn On Black board
Dividend Stocks

Where Will Power Corporation Be in 5 Years?

Here's how Power Corporation of Canada (TSX:POW) stock could generate double-digit returns and outperform financial sector peers in five years...

Read more »

view of skyscapers from below
Dividend Stocks

Where I’d Invest $5,500 in the TSX Today

Seeking to invest $5,500 in the TSX? Here’s a look at two stellar picks that can provide decades of growth…

Read more »

shopper buys items in bulk
Dividend Stocks

The Smartest Consumer Defensive Stock to Buy With $2,700 Right Now

Here's why Loblaw (TSX:L) is among the best consumer defensive stocks investors can consider in this increasingly uncertain environment.

Read more »

Forklift in a warehouse
Dividend Stocks

How I’d Build a $250 Monthly Income Stream With $14,000

The trick to earning $250+/month is reinvesting dividends and adding to your portfolio over time.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

The Top Canadian Stocks to Buy Immediately With $4,000

Insurance stocks are some of the strongest options, because we all need to pay it! And these three look top…

Read more »