Buy 197 Shares of This Dividend Stock and Create $31.24 in Monthly Passive Income

Payday ringed on a calendar

In today’s uncertain economic landscape, the importance of creating passive income cannot be overstated. The ability to generate a consistent stream of income, especially on a monthly basis, can provide financial stability and peace of mind. However, not all income-generating investments are created equal. Safety and reliability are paramount, making dividend stocks a go-to choice for many investors.

Consider royalty stocks

When it comes to building passive income through dividend stocks, royalty stocks often stand out. They are a safer and more reliable choice than regular dividend-paying equities. The reason for this lies in their unique business model.

Royalty stocks, such as A&W Revenue Royalties Income Fund (TSX:AW.UN), derive their income from royalties paid by resource companies in exchange for the right to exploit their properties. This setup provides a built-in layer of security. These royalties are often tied to the price of commodities, ensuring a steady stream of income, even in volatile markets.

Why AW.UN could be the best choice

Now that we’ve established the benefits of royalty stocks, let’s take a closer look. In particular, why AW.UN, in particular, could be an excellent option for generating monthly passive income.

AW.UN’s historical strength and growth make it an appealing investment choice. As of the time of writing, AW.UN shares are priced at $33 per share. This mirrors their value at the beginning of the year. This stability in share price, especially in a dynamic market, suggests resilience and consistency, making it an attractive option for income investors.

Additionally, AW.UN has demonstrated impressive growth over the years. This growth is further underscored by its reliable and increasing dividend payments over time. This can provide investors with a consistent income stream. This comes from steady royalties paid by A&W Canada’s franchisees. As long as the A&W brand remains popular and its franchisees continue to generate sales, AW.UN should have a consistent stream of income.

How to create monthly passive income with AW.UN stock

Now that we’ve established why AW.UN is a strong option, let’s explore how you can create monthly passive income with this dividend stock. We’ll go on to consider how a $6,500 investment in AW.UN could translate into monthly passive income.

If you were to invest $6,500 in AW.UN at its current price of $33 per share, you would acquire 197 shares. With a dividend yield of 5.79%, at $1.92 per share, your annual dividend income from this investment would be around $378.24. Divided by 12 months, this amounts to approximately $31.52 in monthly passive income.

Bottom line

In times of economic uncertainty, creating a reliable source of monthly passive income is a smart financial move. Royalty stocks like AW.UN offer a level of safety and stability that can provide investors with peace of mind.

AW.UN’s track record of historical strength and growth, coupled with its sustainable dividend yield, positions it as an attractive choice for long-term monthly income generation. While past performance is no guarantee of future results, AW.UN’s ability to weather various economic conditions makes it a compelling option for investors seeking both safety and potential for higher returns.

Ultimately, AW.UN stands as a beacon of consistency in an unpredictable financial landscape. It offers investors the opportunity to not only create monthly passive income but also build a solid foundation for their financial future.

The post Buy 197 Shares of This Dividend Stock and Create $31.24 in Monthly Passive Income appeared first on The Motley Fool Canada.

Should You Invest $1,000 In A&w Revenue Royalties Income Fund?

Before you consider A&w Revenue Royalties Income Fund, you’ll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in August 2023… and A&w Revenue Royalties Income Fund wasn’t on the list.

The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 26 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks
* Returns as of 8/16/23

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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends A&w Revenue Royalties Income Fund. The Motley Fool has a disclosure policy.