Passive Income: How Much Should You Invest to Earn $500 Every Month?

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While the macro trajectory remains uncertain, keeping the equity market volatile, investors can still earn steady passive income from dividend-paying stocks backed by fundamentally strong businesses. For instance, investors can earn $500 every month by investing in shares of companies like SmartCentres Real Estate Investment Trust (TSX:SRU.UN), Pizza Pizza Royalty (TSX:PZA), and NorthWest Healthcare Properties (TSX:NWH.UN).

These companies offer monthly dividend payments and have attractive yields near the current levels, making them a compelling investment to earn a regular passive income. Let’s delve deeper to understand why these companies are solid investments to income investors and how much one should invest to make $500 monthly. 

SmartCentres Real Estate Investment Trust 

SmartCentres is a leading, fully integrated REIT (real estate investment trust) that’s popular for its attractive monthly payouts due to the strength in its core recurring retail income. The firm owns $11.8 billion worth of assets and operates a portfolio of 189 strategically located properties. 

The company benefits from its high-quality rental space, large tenants with stable businesses, and industry-leading occupancy rate. Investors should note that most of SmartCentres’s tenants provide essential services. These include corporations like Walmart and Metro, who own resilient businesses, thus adding stability to the company’s income. Furthermore, SmartCentres had a high occupancy rate of 98.2% at the end of the second quarter (Q2), which is encouraging. In addition, the company benefits from its strong balance sheet and fixed rate, which safeguards it against a higher interest rate environment. 

SmartCentres REIT pays a monthly dividend of $0.154 a share, implying a yield of 7.6%.

Pizza Pizza Royalty

Pizza Pizza Royalty owns and franchises quick-service restaurant quick-service restaurants. It primarily earns royalty income, which is tied to the sales of its two leading brands, including Pizza Pizza restaurants (6% of system sales) and Pizza 73 restaurants (9% of system sales).

The company focuses on enhancing its shareholders’ returns through higher dividend payments and distributes available cash to its shareholders after retaining reasonable reserves. The company is benefiting from the economic reopening, higher traffic, and increased pricing and has significantly increased its dividend over the past year. 

Currently, Pizza Pizza Royalty pays a dividend of $0.075 per share, translating into a yield of 6.4%.

NorthWest Healthcare Properties 

Like SmartCentres, NorthWest Healthcare Properties also offers monthly payouts and a lucrative yield. The corporation owns and operates a defensive portfolio of healthcare real estate infrastructure, which is geographically diversified. Besides Canada, its assets are spread across the U.S., Australia, Europe, and Brazil. 

NorthWest Healthcare benefits from its solid tenant base, including hospital operators and healthcare practitioners. In addition, most of its tenants have direct or indirect government support, adding stability to its cash flows and payouts. 

NorthWest Healthcare also enjoys a high occupancy rate of close to 96% and has a long average lease expiry term of nearly 14 years. This adds visibility and stability to its future earnings. Moreover, most of its leases are subject to indexation, enabling the company to grow organically and generate strong same-property net operating income. It pays a monthly dividend of $0.067, reflecting a yield of 11.9%. 

Earn $500 every month

SmartCentres, Pizza Pizza Royalty, and NorthWest Healthcare offer monthly dividends and have compelling yields. The table below shows that investors need to invest $23,100 in each of these stocks to earn $500 every month in passive income.

CompanyRecent PriceNumber of SharesDividendTotal PayoutFrequency
SmartCentres REIT$24.2955$0.154$147.07Monthly
Pizza Pizza Royalty$14.051,644$0.075$123.30Monthly
NorthWest Healthcare$6.73,448$0.067$231.01Monthly
Prices as of 09/06/23

The post Passive Income: How Much Should You Invest to Earn $500 Every Month? appeared first on The Motley Fool Canada.

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Fool contributor Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool recommends NorthWest Healthcare Properties Real Estate Investment Trust and SmartCentres Real Estate Investment Trust. The Motley Fool has a disclosure policy.