2 Affordable Passive-Income Stocks That Pay Monthly

Payday ringed on a calendar
Image source: Getty Images

Written by Demetris Afxentiou at The Motley Fool Canada

Establishing a stable and affordable passive-income stream is a goal of every investor. Even more rare are income stocks that can provide a generous distribution on a monthly cadence. Fortunately, finding those stocks is not as hard as some investors believe.

Here’s a look at two must-have, affordable, passive-income stocks that boast monthly payouts.

Well-diversified, affordable passive income

Finding that perfect mix of diversified investments can take time. One such example for investors to consider right now is Exchange Income Corporation (TSX:EIF).

In case you aren’t yet familiar with Exchange, don’t worry. This is one stock that you’re unlikely to forget.

Exchange is focused on acquiring growth-focused companies that generate cash. That cash is, in turn, used to invest in additional growth and fund its juicy monthly dividend (more on that later).

The subsidiary businesses that Exchange owns are grouped into aviation and manufacturing segments.

On the aviation side of the business, Exchange’s subsidiaries include providing cargo and passenger service to remote areas of Canada’s north. Another example is a flight school that provides training for commercial and military pilots.

Turning to the manufacturing segment, subsidiaries in this segment provide customized machining and fabricating services for both the commercial and military sectors.

Interestingly, both segments boast several noteworthy points. They all provide a unique service for which there is limited competition yet a high demand. More importantly, they also all generate cash.

This factor alone makes Exchange a unique opportunity with some defensive appeal to consider. And then there’s the dividend.

Exchange offers a juicy monthly dividend. As of the time of writing, the yield is a respectable 4.59%. This means that investors who buy $30,000 of Exchange (always as part of a larger, well-diversified portfolio) can expect to generate a monthly income of nearly $115.

Keep in mind that investors who are not ready to draw on that income yet can reinvest it until needed. This allows that eventual income to increase further.

Speaking of increases, Exchange has offered handsome bumps to that dividend over the years. Specifically, Exchange has provided an increase in 16 of the past 19 years.

You can be better than a landlord with this stock

When thinking about affordable passive-income streams that offer a monthly payout, establishing a rental income comes to mind. Unfortunately, given the white-hot real estate market and sky-high interest rates, the cost of entry is too high for many.

This is where RioCan Real Estate (TSX:REI.UN) can help those prospective would-be landlords. RioCan is one of the largest real estate investment trusts (REITs) in Canada, boasting a portfolio of over 190 properties with a whopping $13 billion enterprise value.

Most of those properties are commercial retail, but the REIT is increasingly shifting towards mixed-used residential. The properties are located along high-traffic transit routes in Canada’s major metro areas.

Known as RioCan Living, the properties comprise of residential towers sitting atop several floors of retail. In doing so, these new mixed use-properties cater to several emerging needs in the market, which only further the long-term appeal of RioCan.

First, by transitioning to mixed-use residential, RioCan can lessen the over-reliance on legacy retail sites. These sites have witnessed reduced traffic in years, as shoppers increasingly turn to mobile commerce.

Second, this approach caters to the growing demand for housing within major metro areas. As a result of rising prices and increasing unaffordability, many commuters have been forced out of the metro areas to find affordable homes. As a result, as of the most recent quarter, RioCan boasts an occupancy rate of 97.4%.

And RioCan is still expanding that mixed-use residential segment. As of the most recent update, the REIT has over 2,500 residential units under construction. In other words, RioCan also boasts long-term growth potential.

Turning to dividends, RioCan’s monthly distribution offers a yield of 5.34%. Using the same $30,000 example from above, prospective investors can expect to generate a monthly income of $134.

Final thoughts

No investment is without risk, and that includes RioCan and Exchange. Fortunately, both stocks are well-diversified options that boast growth and income.

In my opinion, both stocks are affordable passive-income options that should be core holdings of any well-diversified portfolio.

The post 2 Affordable Passive-Income Stocks That Pay Monthly appeared first on The Motley Fool Canada.

Should You Invest $1,000 In Exchange Income Corporation?

Before you consider Exchange Income Corporation, 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 April 2023... and Exchange Income Corporation 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 21 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks * Returns as of 4/18/23

More reading

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.