VDY:CC - How to Build a Bulletproof Monthly Passive-Income Portfolio in 2024 With Just $20000

2024-05-01 16:10:00 ET

Building a monthly passive-income stream should help individuals and households accelerate their retirement plans while creating an alternative income stream. One low-cost way to create a monthly passive-income portfolio is by investing in quality dividend-paying ETFs ( exchange-traded funds ).

Investing in ETFs provides diversification, which lowers overall risk. Moreover, you gain exposure to a variety of stocks across sectors, which also reduces volatility associated with investing in individual stocks.

Here, we’ll look at three such TSX ETFs that pay you a monthly dividend in 2024.

iShares Global Monthly Dividend Index ETF

The first ETF on the list is iShares Global Monthly Dividend Index ETF ( TSX:CYH ), which provides exposure to a portfolio of dividend-paying companies globally. The index screens companies based on criteria including dividend history, dividend growth, and payout ratios.

The CYH aims to replicate the Dow Hones Global Select Dividend Composite Index, which can be used to diversify your portfolio and generate monthly income. Some of the largest companies in the ETF include Altria , Exxon Mobil , Verizon , Chevron , and Philip Morris , which account for more than 10% of the ETF.

The CYH ETF pays a monthly dividend of $0.08 per share, translating to a forward yield of 4.75%. With a management fee of 0.60% and an expense ratio of 0.66%, the ETF might seem expensive. But it’s also hedged to the Canadian dollar, protecting investors from fluctuations in exchange rates.

iShares Canadian Financial Monthly Income ETF

iShares Canadian Financial Monthly Income ETF ( TSX:FIE ) is a portfolio that consists of shares, bonds, and income trust units of issuers in the Canadian financial sector. It provides targeted exposure to the highly regulated financial services sector in Canada.

Some of the largest companies on the TSX are in the banking and financial sector. Over the years, these financial heavyweights have enjoyed entrenched positions and economic moats that allow them to thrive across market cycles, resulting in inflation-beating returns over time.

Some of the largest holdings of the ETF include Manulife , Toronto-Dominion Bank , and Royal Bank of Canada . The FIE fund pays investors a monthly dividend of $0.04 per share, indicating a forward yield of 6.8%.

Vanguard FTSE Canadian High Dividend Yield Index ETF

The final ETF on the list is Vanguard FTSE Canadian High Dividend Yield Index ETF ( TSX:VDY ) that provides exposure to large-, mid-, and small-cap stocks in Canada.

The ETF holds 56 stocks with a median market cap of $85.6 billion. The financial sector accounts for 56% of the fund, followed by energy at 29.6% and utilities at 5.9%. Large-cap stocks account for almost 90% of the VDY ETF.

The VDY ETF pays you a monthly dividend of $0.18 per share, indicating a forward yield of almost 5%.

The Foolish takeaway

An investment of $20,000 distributed equally in these three TSX ETFs should help you earn roughly $1,100 in annual dividends. If these payouts increase by 5% annually, your dividends should double in the next 14 years, increasing the yield at cost to 11%.

The post How to Build a Bulletproof Monthly Passive-Income Portfolio in 2024 With Just $20,000 appeared first on The Motley Fool Canada .

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Chevron and Philip Morris International. The Motley Fool has a disclosure policy .

2024