How to earn stable passive income with dividend stocks

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Many Canadians may be confused about what passive income really means. But it’s exactly what it looks like. It is the income that comes without doing anything.

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Once you have made this original investment, you can simply relax and look forward to receiving money again and again.

Many Canadians are looking into real estate investing for passive income. But taking care of your tenants and staying on top of home repairs is no negative.

This is why investing in dividend stocks can be one of the easiest ways to create true passive income. You’re making that purchase and looking at the income every quarter, and in this case, every month. Even better if you use a file Free investment app.

So today let’s take a look at three dividend stocks that pay passive income through the dividend each month. Moreover, these are stable monthly dividend stocks that provide long-term gains for investors to consider as well.

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Pizza Royalty Pizza (PZA)

profit return: 6.25 percent

There is a big difference between investing in a retail location or food chain and an ownership company. If you’re investing in a food chain, for example, you should pay attention to things like revenue, dividends, income, and more. But when you invest in an ownership company like Pizza Royalty (PZA), that’s a different story.

Here, the investors are getting a fixed income because the fund is getting a fixed income. The company owns and franchises its restaurants under the Pizza Pizza name, as well as 73 other brands in Canada. He simply raises the funds needed to use the franchise name each month. This is why investors get this money through dividends on a monthly basis.

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Pizza Royalty has been around since 1967, and it’s still doing quite well. It’s a good value option that also offers a dividend yield of 6.25 percent. At $13.87, a $5,000 investment could bring in $313.20 per year, or $26.10 per month.

First National Finance (FN)

Dividend Yield: 6.3%

Now admittedly, financial institutions tend not to do so well during downturns and recessions. First National Financial (FN) is no exception here, with shares down 1 percent in the past year. However, there is an obvious reason for this, which is the high interest rates.

First National Stock Services commercial and residential mortgages across Canada. Sure, that was great when home sales and prices were high, but in this current climate, many Canadians are taking a break when it comes to needing a new mortgage. After peaking in the fourth quarter of 2020, mortgage refinances and renewals are down 32 percent, according to the latest data from the Canada Mortgage and Housing Corporation (CMHC).

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A correction may be needed, but with a mild recession on the way, there is likely to be an improvement soon. This will include shares of First National, which can still see net income and revenue increase year-over-year, as of our 2022 annual earnings report.

So with stocks down now, they won’t stay down forever, which is why now is a good time to look into it. That, plus a dividend yield of 6.3 percent, could be very valuable. Again, if you were to invest $5,000 now, that could turn in $310.80 per year at the time of writing, or about $25.90 per month.

Dream Housing Fund (DRR.U)

Dividend Yield: 5.53%

Coming in at the lower end is Dream Residential Real Estate Investment Trust (DRR), which has also been hurt by the housing decline. However, the benefit here is that this is a completely new REIT. Its initial portfolio consists of 16 ‘garden style’ multi-dwelling properties. Moreover, they are not located only in Canada.

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Instead, Dream has expanded to the Sunbelt and Midwestern regions of the United States. These areas have seen a large influx of Americans looking for homes that offer a better lifestyle. In fact, according to a study conducted by United Van LinesAmericans left densely populated regions for warmer, less populated regions in the Sunbelt and Midwest.

Given this trend, Dream Residential seems to be making the right moves. Shares could be down 27.9% in the last year in this bad economic environment. So when interest rates fall again, it can be a huge turnaround for investors.

Meanwhile, investors can still receive significant monthly dividends from Dream Residential for the time being. At 5.53 percent, you would bring in $246.15 per year from a $5,000 investment as of this writing. That will come out to about $22.01 each month.

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Build your own earnings

There you have it, three TSX stocks to consider if you’re looking for passive monthly income.

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