1 Under-$20 Dividend Stock to Buy for Monthly Passive Income

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Written by Demetris Afxentiou at The Motley Fool Canada

There’s no shortage of great dividend stocks to buy right now. Even better, some of those dividend stocks can provide investors with monthly passive income.

Here’s a monthly passive income stock to buy for under $20 right now.

Have you considered a REIT lately?

Most investors are familiar with REITs (real estate investment trusts). In short, REITs own and manage real estate properties. By buying into a REIT, investors are buying into a portfolio of hundreds of properties scattered across a large area.

When compared to owning an individual rental property, REITs are significantly lower-risk options. Investing in a REIT also means that there’s no need for a massive downpayment, property taxes, maintenance, and chasing down tenants.

Perhaps best of all, REITs generate monthly passive income, much like a landlord cashing in a cheque each month.

Here’s the REIT for your portfolio

RioCan Real Estate (TSX:REI.UN) is one of the largest REITs in Canada. RioCan operates a portfolio of over 190 properties across the country, which are mainly commercial retail sites.

In recent years, RioCan has introduced a slew of new property types into the mix, and that is where a huge opportunity lies. The sites are mixed-use residential, comprising residential units sitting atop several floors of retail.

These sites, which RioCan calls RioCan Living, are situated along transit corridors in major metro areas. In other words, they are in high-demand areas where commute times are shorter while providing access to shopping and entertainment.

Let’s talk about income

One of the main reasons why investors turn to REITs like RioCan is for the monthly distribution. And the monthly passive income generated from investing in RioCan doesn’t disappoint.

As of the time of writing, RioCan offers a juicy 6.48% yield. For investors who are able to invest $40,000, that works out to a monthly passive income of $216. Prospective investors should keep in mind that when investing in RioCan, the risk is spread out across all sites rather than a single rental unit.

This lower-risk monthly passive income option means that investors can see RioCan as a buy-and-forget option for any well-diversified portfolio. Even better, those investors who are not ready to draw on that income can choose to reinvest it until needed. This allows any eventual income to grow further.

Investors who are looking to invest in RioCan have one more point to note. The stock, like much of the market, currently trades at a discount. Year to date, the stock is down nearly 20%, making it an ideal time to buy for long-term investors.

Start generating monthly passive income today

No investment is without some risk, and that includes RioCan. RioCan does, however, offer investors a well-diversified portfolio of properties and a juicy yield. This makes it an ideal alternative to owning a single rental property while still generating monthly passive income.

Throw in the discount on the stock price at the moment, and you have, in my opinion, a stellar long-term investment that should be a small part of every well-diversified portfolio.

The post 1 Under-$20 Dividend Stock to Buy for Monthly Passive Income appeared first on The Motley Fool Canada.

Should You Invest $1,000 In RioCan?

Before you consider RioCan, 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 October 2023... and RioCan 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 25 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks * Returns as of 10/10/23

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Fool contributor Demetris Afxentiou has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.