If your goal in 2026 is steady monthly income, allocating capital to a reliable dividend-paying stock can be a powerful part of your strategy. A $40,000 position in a quality Canadian company can generate approximately $250 per month in passive cash flow — translating to about 7.5% annualized yield — without needing to sell your shares.

The stock that delivers this income profile is Cardinal Energy (TSX: CJ), a Canadian oil and gas producer with a focus on conventional barrels and low-decline assets. Unlike many high-growth tech or cyclical names, Cardinal’s business model centers on producing and selling energy, with cash flow heavily tied to commodity prices — especially crude oil and natural gas liquids. The company’s monthly dividend is a core feature for income investors, providing consistent monthly payouts rather than the traditional quarterly schedule most companies use.

Over time, a monthly distribution can help with budgeting and reinvestment discipline. For example, if you hold Cardinal within a tax-advantaged account like a TFSA or RRSP, the monthly payouts compound free of tax drag, enhancing your long-term income growth. Even in non-registered accounts, monthly cash flow can streamline budgeting for bills, living expenses, or reinvestment without having to time the market.

A key advantage of Cardinal’s setup is its low decline production base. Low decline means existing wells lose output slowly, which protects cash flow when you’re not constantly drilling new ones — that’s critical for sustaining distributions. Cardinal’s asset mix spans multiple regions and commodity types, which also helps diversify revenue sources within the energy space.

Of course, energy stocks — especially producers — aren’t risk-free. The biggest risk is commodity price volatility: when oil or gas prices fall sharply, revenue and free cash flow can contract quickly, putting pressure on dividends or forcing operational changes. Cardinal’s monthly yield is attractive, but it’s tied directly to cash flow from operations, which can vary with market conditions.

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This makes it important to view Cardinal not as a speculative play but as part of a broader income-oriented strategy. Balancing energy exposure with other dividend payers — like utilities or banks — can help smooth overall portfolio income and reduce reliance on any single sector’s performance.

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In summary, if you want approximately $250 per month in passive income from a Canadian dividend stock and are comfortable with energy sector risks, a $40,000 position in Cardinal Energy offers a compelling, income-focused option set up for monthly payouts.