Invest $500 Per Month to Create $240-$300 in Passive Income in 2026

Building meaningful passive income doesn’t require a six-figure portfolio or perfect market timing. For Canadian investors, consistency matters far more than brilliance. By committing just $500 per month to high-quality, income-generating stocks, you can begin laying the foundation for reliable cash flow — as soon as 2026.

If you invest $500 per month starting now, by the end of 2026, you will have contributed $6,000. Even before factoring in capital appreciation, that modest nest egg can already start paying you.

At a 4% yield, $6,000 generates about $240 per year in passive income. At a 5% yield, that figure rises to $300 annually. It may not sound life-changing yet — but this is where long-term investing starts to compound quietly in your favour.

Consistency turns small contributions into real income

The real power of this strategy lies in persistence. Continue investing $500 every month and reinvesting your income, and the numbers begin to snowball. Here’s what the math looks like if you stay disciplined (without accounting for reinvested income):

YearsSavings investedAnnual income with 4% yieldAnnual income with 5% yield5$30,000$1,200$1,50010$60,000$2,400$3,00020$120,000$4,800$6,00030$180,000$7,200$9,00040$240,000$9,600$12,000

This assumes no dividend growth and no market appreciation — a conservative baseline. In reality, many Canadian companies raise their dividends regularly, meaning your income can grow without adding new capital.

Dividend growth is the quiet wealth multiplier

That’s where dividend-growth stocks shine. One reliable hunting ground is the S&P/TSX Canadian Dividend Aristocrats Index, which includes companies that have increased dividends for at least five consecutive years.

Two notable names currently trading at attractive valuations are Canadian Natural Resources (TSX:CNQ) and Canadian National Railway (TSX:CNR).

Canadian Natural Resources benefits from a vast, low-decline asset base spanning oil sands, conventional crude, and natural gas. 

Strong free cash flow, disciplined capital allocation, and shareholder-friendly policies have allowed it to raise its dividend for roughly 24 consecutive years. 

Its five-year dividend-growth rate exceeds 23%, and over the past decade it has delivered annualized returns of about 17.5%. At recent prices, CNQ offers a yield of around 5.4%, with analysts seeing near-term upside of about 22%.

Canadian National Railway, meanwhile, operates one of North America’s most valuable transportation networks. High barriers to entry create an economic moat that supports steady cash flow and pricing power. 

CN Rail has raised its dividend for about 29 consecutive years with a five-year and 20-year dividend-growth rate of 9.5% and 15.3%, respectively. While the yield is lower at roughly 2.6%, the reliability and growth potential may appeal to long-term income investors.

Investor takeaway

Investing $500 per month won’t make you rich overnight — but it will get you paid. By the end of 2026, you can realistically generate $240–$300 in passive income annually, while positioning yourself for far more over time. 

Pair consistent investing with high-quality Canadian dividend growers, shelter the income inside a Tax-Free Savings Account if you have room, and let time do the heavy lifting. Quiet, boring, and disciplined investing could be the most profitable strategy of all while limiting the dramas of the stock market.

The post Invest $500 Per Month to Create $240-$300 in Passive Income in 2026 appeared first on The Motley Fool Canada.

Should you invest $1,000 in Canadian Natural Resources right now?

Before you buy stock in Canadian Natural Resources, consider this:

The Motley Fool Stock Advisor Canada analyst team identified what they believe are the 15 best stocks for investors to buy now… and Canadian Natural Resources wasn’t one of them. The 15 stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 … if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,105.89!*

Now, it’s worth noting Stock Advisor Canada’s total average return is 95%* – a market-crushing outperformance compared to 72%* for the S&P/TSX Composite Index. Don’t miss out on our top 15 list, available when you join Stock Advisor Canada.

See the 15 Stocks #start_btn6 { background: #0e6d04 none repeat scroll 0 0; color: #fff; font-size: 1.2em; font-family: 'Montserrat', sans-serif; font-weight: 600; height: auto; line-height: 1.2em; margin: 30px 0; max-width: 350px; text-align: center; width: auto; box-shadow: 0 1px 0 rgba(0, 0, 0, 0.5), 0 1px 0 #fff inset, 0 0 2px rgba(0, 0, 0, 0.2); border-radius: 5px; } #start_btn6 a { color: #fff; display: block; padding: 20px; padding-right:1em; padding-left:1em; } #start_btn6 a:hover { background: #FFE300 none repeat scroll 0 0; color: #000; } @media (max-width: 480px) { div#start_btn6 { font-size:1.1em; max-width: 320px;} } margin_bottom_5 { margin-bottom:5px; } margin_top_10 { margin-top:10px; }

* Returns as of November 17th, 2025

More reading

• TFSA Investors: 2 Top Canadian Energy Stocks to Add to Your Portfolio Right Now
• Long-Term Investing: Railway Stocks Are Struggling Now, but They Actually Have a Tonne of Potential
• These Dividend Growth Stocks Should Have Totally Impressive Total Returns
• Best Dividend Stocks Canadian Investors Can Buy Now
• Invest $20,000 in 2 TSX Stocks for $880 in Passive Income

Fool contributor Kay Ng has positions in Canadian National Railway. The Motley Fool recommends Canadian National Railway and Canadian Natural Resources. The Motley Fool has a disclosure policy.