2 actions that earn you money every month
Do you want to become more financially independent? Supplementing your income with investments can be a big step in this direction. Investing in stocks for the long term is a great way to build wealth for years to come. But unless these stocks pay dividends, they won’t do much to help pay your bills in the short term.
If you want frequent cash flow that you can rely on in addition to your capital appreciation, consider investing in either. LTC Properties (NYSE: LTC) or Renewable energies TransAlta (OTC: TRSWF). Their monthly payments make them great investments that can be great sources of recurring income for your portfolio.
1. LTC properties
LTC Properties Real Estate Investment Trust (REIT) provides investors with excellent health care exposure while providing valuable diversification. It has more than 170 investments in 27 states, with half of its properties being senior housing and the other half qualified nursing facilities. Although the REIT typically uses sale and leaseback arrangements, it is also involved in a wider range of arrangements, including joint ventures and providing financing solutions to other companies.
This diversification is invaluable for investors who do not wish to invest in a business entirely dependent on the payment of rents. Although rental income makes up the bulk (around 80%) of his income, about a fifth comes from interest he earns on mortgages, as well as other sources of income.
With incredible gross margins of 90% and net income normally amounting to 50% of revenues, LTC has produced excellent results for investors in recent years. Its payout ratio stands at 92% of funds from operations (FFO), which is a measure used by REITs to gauge their performance, based on its most recent quarterly results for the period ending March 31.
A high payout ratio can be a concern for many stocks, but REITs need to pay out at least 90% of their profits to shareholders, so this doesn’t necessarily present a problem for investors. That being said, the company just ended a quarter in which its $ 40 million revenue declined 13% year-over-year. LTC noted that it had reduced rent and interest increases during the period to help businesses still struggling with the effects of the pandemic. However, while the economy is still recovering and LTC maintains strong earnings despite struggling many of its operators and partners, this is a good sign that the company is resilient enough to maintain its dividend payments. .
LTC stock is currently earning 5.9%, and investing less than $ 21,000 in this company would be enough for you to earn $ 100 each month from its dividend. This is a relatively secure way for income investors to earn great returns.
2. Renewable energies TransAlta
TransAlta Renewables pays less than 4.4% return, but it’s still well above S&P 500 on average only 1.4%. Plus, like with LTC, you’ll receive one payment every month. It’s also one of the few dividend-paying stocks you’ll find that has great potential for long-term growth. As the name suggests, the company invests in renewable energies and operates solar, wind, hydro and gas installations. According to Facts & Factors analysts, the global renewable energy market could be worth more than $ 1.9 billion by 2026, with a compound annual growth rate of 8.3% so far.
Investors will need to be patient with TransAlta. The company’s revenue has stagnated over the years, and its 2020 revenue of C $ 436 million was down 2% from the previous year. This is undoubtedly a long-term game for growth investors, as it may take some time for consumers to switch to renewables. However, with an attractive dividend yield, there is certainly an incentive for investors to hold on to the stock until then.
Although its payout ratio is currently over 100%, TransAlta’s dividend does not appear to be in jeopardy as its free cash flow over the past 12 months has totaled C $ 256 million, more than CA $ 237 million paid. in dividends during this period. In each of the past five years, the company’s available cash flow has been strong enough to support its payments.
TransAlta has not increased its dividend payouts for several years, but what is important is that its current dividend appears sustainable. To earn $ 100 with this stock, you will need to invest almost $ 27,300. However, there is much more than what you can gain from this long-term investment – demand for renewable energy is probably not going anywhere but increasing, and the company is in an excellent position to benefit from it.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.