Yahoo Finance Invest $833 Each Month to Create Passive Income of $2,720.40 in 2024
Written by Amy Legate-Wolfe at The Motley Fool Canada
There’s a lot that investors can do if they can just manage to squeeze a little bit out of their income to put towards investing. And right now is actually a great time. Investors can put cash aside month after month and get more back both through returns and dividends.
How? The market might be improving, but isn’t there quite yet. This is why right now is the perfect time to get into the stock market for high dividend yields on returning stocks. So, here is how you can make the most of just $833.
Find deep value
First off, you’re going to want to find companies that offer deep value on the TSX today. That means finding companies that are down now but have long histories of strength coupled with a future history of growth as well.
What investors should dig into is history, current performance, and fundamentals. Ideally, a company should be around for decades. This would mean that it’s come through multiple recessions and, of course, the recent pandemic. And if they come out strong on the other side, that alone shows a strong company to invest in.
Then there’s current performance. What do earnings look like? Does the company operate at a loss? If so, then that could signal a huge problem in the near future with interest rates and inflation remaining high. Then, look into fundamentals. How is it managing debt? Does it have a strong balance sheet? Is it good at repaying that debt and rewarding shareholders through buybacks and dividends?
If it ticks all these boxes, it could be a strong contender for your passive-income investment. But here is one I would consider right now.
A strong contender
TFI International (TSX:TFII) is a strong contender for those seeking deep value and to create passive income. This would come through both long-term returns as well as the company’s solid dividend. Shares of TFII stock have fallen in the recent past as the company as interest rates and inflation hurt the company. It then needed to cut back and create cost-saving opportunities.
It turns out one of those opportunities was to actually expand. The company made a US$1.1 billion acquisition to expand its current trucking fleet. This actually saves money from them having to upgrade the current fleet it holds.
Furthermore, TFII stock is spinning out into two separate businesses. First, there is the trucking business, as well as the logistics business. This is another easy way to create value for investors, though shares are still undervalued at current levels. Shares are up 25% in the last year, though they’re at just 1.26 times sales.
The dividend
So, then, let’s look at that dividend. TFII stock currently offers a dividend yield of 1.18%. That’s actually lower than its five-year average of 1.5%. Therefore, we could see it increase in the near future. Furthermore, the payout ratio is at just 23%, meaning the company has room to grow the dividend to reach that comfortable 30-80% range.
So, let’s say you were to put $10,000 into TFII stock. You then see shares surge another 25% in the next year and see that dividend continue. Here is what that could bring in during the next year alone.
COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | PORTFOLIO TOTAL |
TFII – now | $180 | 56 | $2.15 | $120.40 | quarterly | $10,000 |
TFII – future | $225 | 56 | $2.15 | $120.40 | quarterly | $12,600 |
Therefore, you would see returns come in at $2,600 as well as dividend income of $120.40. That’s total passive income of $2,720.40.
The post Invest $833 Each Month to Create Passive Income of $2,720.40 in 2024 appeared first on The Motley Fool Canada.
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More reading
Can You Guess the 10 Most Popular Canadian Stocks? (If You Own Them, You Might Be Losing Out.)
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Fool contributor Amy Legate-Wolfe 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.
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