How I'd Build a $1,000 Monthly Income Stream With Just These 2 Stocks
Creating a $1,000 monthly income stream with just two TSX stocks may seem like a big ask. But with a little capital and the right mix of reliability and yield, it can be done. The secret is focusing on cash-generating businesses with high distributions and strong fundamentals. For this, I'd lean on Slate Grocery REIT (TSX:SGR.UN) and Freehold Royalties (TSX:FRU). These two dividend stocks may operate in very different sectors, but both serve up serious passive income potential.
Slate Grocery REIT is in the business of owning U.S. grocery-anchored retail centres. In a market filled with uncertainty, that's not a bad place to be. Grocery stores are considered essential, which means Slate's tenants tend to be stable and long term. The real estate investment trust (REIT) focuses on distributing regular income to unit holders.
In Q1 2025, Slate earned US$16.1 million in net income and US$12.3 million of that was attributable to unit holders. Funds from operations (FFO) came in at US$19.6 million, while monthly distributions were maintained at about $1.20 per unit on an annual basis. With a Canadian unit price around $11.20, that works out to a yield close to 8.2%, paid in cash every single month.
Its occupancy sits near 94.2%, and Slate collected 99.1% of rents due in the quarter. These are not small figures for a REIT operating in the current environment. Still, risks do exist. Slate carries over $1.2 billion in debt and a leverage ratio just over 52%. Interest rates will keep pressure on refinancing costs and could cap short-term growth. But as long as the rent keeps flowing and grocery stores stay full, the REIT should be able to maintain distributions and slowly grow its property base.
Now on to Freehold Royalties. This isn't your average energy company. Freehold doesn't drill wells, it collects royalties. That means it gets paid based on production by third-party operators across Canada and the U.S., without the headaches of managing rigs or hiring crews.
In Q1 2025, Freehold posted royalty and other revenue of $91.1 million, up 23% from the year before. FFO hit $68.1 million, translating to $0.42 per share. Dividends paid come to $0.09 monthly or $1.08 annually, good for a yield of about 8.4%.
Freehold's production hit a record 16,248 barrels of oil equivalent per day, with 65% of that from higher-value liquids. Its U.S. assets continue to grow, representing 43% of production and 54% of revenue in Q1. This diversification adds stability. Freehold's payout ratio was 65%, and the balance sheet remains healthy with net debt at $272 million and a debt-to-cash-flow ratio of just 1.1 times. That's comfortable for an energy royalty firm.
Still, the dividend stock isn't immune to energy prices. A sharp drop in oil could impact future cash flows and put pressure on dividend sustainability, but management appears disciplined and has room to adjust capital plans if needed.
So, how would you get to $1,000 a month in income using only these two? It could be split evenly between the two, or weighted depending on your income preferences. Slate's monthly payout provides regular income flow, while Freehold's quarterly dividend could be smoothed out over time. With the two invested in equally, here's how it could shake out.
COMPANY
RECENT PRICE
NUMBER OF SHARES
DIVIDEND
TOTAL PAYOUT
FREQUENCY
TOTAL INVESTMENT
FRU
$42.00
500
$3.84
$1,910.00
Monthly
$21,000.00
SGR.UN
$14.10
8,842
$1.18
$10,433.56
Monthly
$124,672.20
Total
—
—
—
$12,343.56
—
$145,672.20
There's no such thing as a risk-free yield, especially in today's market. Slate faces refinancing pressures, and Freehold rides the waves of energy prices. But both dividend stocks have proven their ability to generate strong, stable cash flows. And yes, $145,672 is a lot to invest. For investors seeking dependable monthly income without chasing too many stocks, these two could form the foundation of a simple, powerful strategy.
The post How I'd Build a $1,000 Monthly Income Stream With Just These 2 Stocks appeared first on The Motley Fool Canada.
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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Freehold Royalties and Slate Grocery REIT. The Motley Fool has a disclosure policy.
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