5 Steps to Making $500 in Monthly Passive Income in 2023

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Written by Demetris Afxentiou at The Motley Fool Canada

Establishing a monthly passive income stream is something that every investor should consider, and not only when retiring. Fortunately, there is a way to establish an income stream before you stop working.

Here are some key steps to making $500 in monthly passive income a reality – even in 2023!

Step 1- First, understand it will take time

This may seem self-explanatory, but few investors, especially those who are new to investing, have $40,000 or more to drop on a handful of stocks. And that’s OK.

Establishing a monthly passive income stream of $500 or more is going to take time and plenty of patience. This is why it’s important to start early and give time for that income stream to build up.

Specifically, would-be investors who don’t need to draw on that monthly passive income yet can instead reinvest those monthly dividends until needed. Over a longer period, this will allow that income to grow on autopilot.

Step 2- Invest in this well-diversified gem

Exchange Income Corporation (TSX:EIF) is a great stock that should be on the radar of investors everywhere. Exchange owns over a dozen subsidiary companies that are grouped into either manufacturing or aviation segments.

The subsidiary companies all offer necessary services to niche areas of the market where there is little competition, but strong demand. This includes providing passenger and cargo services to Canada’s remote northern regions, as well as niche manufacturing projects serving the defence industry.

Turning to income, Exchange provides investors with a juicy monthly dividend that currently works out to a yield of 4.89%. Additionally, Exchange has provided a juicy uptick to that dividend 16 times over the past 18 years.

Step 3- Sprinkle in a REIT

REITs are great investments for income-seeking investors. They offer would-be landlords a viable alternative to buying and maintaining properties.

One REIT for investors looking to generate monthly passive income is RioCan Real Estate (TSX:REI.UN). RioCan is one of the largest REITs in Canada, with a growing portfolio of predominately retail-focused properties.

In recent years, RioCan has shifted its focus to mixed-used properties that comprise residential towers sitting above several retail floors. The properties are situated in high-traffic, high-demand locations across Canada’s major metros.

In short, RioCan offers a unique solution that not only offsets the decline in traditional mall traffic but also provides significant long-term growth potential.

Turning to income, RioCan offers a monthly distribution that carries a yield of 5.35% making it a respectable addition to any well-diversified portfolio.

Step 4 – Add some renewable energy

Renewable Energy remains one of the most significant long-term opportunities on the market for investors. And TransAlta Renewables (TSX:RNW) is the renewable energy company to consider adding to your portfolio.

TransAlta boasts a portfolio of over 40 facilities located across Canada, the U.S., and Australia. Those facilities generate a stable and recurring revenue stream that is bound by long-term regulated contracts that span decades.

Apart from the current defensive appeal and long-term growth potential, TransAlta also offers a very juicy monthly distribution. As of the time of writing, TransAlta’s dividend works out to a yield of 7.93%, making it one of the highest yields on the market.

Step 5- Watch your monthly passive income stream grow

No investment is without risk, and that includes the stocks mentioned above. Fortunately, the above stocks all offer some defensive appeal in addition to a juicy income. And that income can quickly add up to $500 or more in monthly income over the longer term.

In fact, allocating just shy of $40,000 to each of the three stocks mentioned above can provide over $600 in monthly passive income.


Recent Price

Number of Shares


Total Payout


TransAlta Renewables






RioCan Real Estate






Exchange Income Corp






Prospective investors should keep in mind that reinvesting that passive income until needed will let it grow further.

In my opinion, one or all of the above stocks would be a great addition to any well-diversified portfolio.

The post 5 Steps to Making $500 in Monthly Passive Income in 2023 appeared first on The Motley Fool Canada.

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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.