How to get $500 a month in dividends?
Dividend-paying Stocks
It all depends on your portfolio's dividend yield. With a 10% yield and monthly payout schedule, you can get to $500 a month with only $60,000 invested. That is, $6,000 per year paid on a monthly basis. Unfortunately, most stocks don't have yields anywhere near 10%.
To consistently earn $500 per month from dividends, you'll need to invest around $193,548 based on Coca-Cola's current dividend yield of 3.1%. This calculation is derived from dividing your annual dividend goal ($6,000) by the yield percentage. For a smaller goal of $200 monthly, the investment would be around $77,419.
In a market that generates a 2% annual yield, you would need to invest $600,000 up front in order to reliably generate $12,000 per year (or $1,000 per month) in dividend payments.
While many dividend-paying stocks dish out cash to shareholders on a quarterly basis, companies that pay monthly dividends can be found among real estate investment trusts (REITs) and business development companies (BDCs).
That's right; you save over $30,000 if you want to create $400 per month in passive income. Furthermore, this could be cash set aside in your TFSA, meaning it would be all tax free, with plenty left over for other investments.
If you were to invest in a company offering a 4% annual dividend yield, you would need to invest about $900,000 to generate a monthly income of $3000. While this might seem like a hefty sum, remember that this investment isn't just generating income—it's also likely to appreciate over time.
The Top 10 list of companies that have paid monthly dividends in 2022 includes ARMOUR Residential REIT, Inc., Orchid Island Capital, Inc., AGNC Investment Corp., Oxford Square Capital Corp., Ellington Residential Mortgage REIT, SLR Investment Corp., PennantPark Floating Rate Capital Ltd., Main Street Capital ...
If you invested in the company 10 years ago, that decision could have paid off. According to CNBC calculations, a $1,000 investment in Coca-Cola in 2009 would be worth more than $2,800 as of Feb. 15, 2019.
Indeed, Coca-Cola has an exceptional track record of consistently increasing its dividend for the past 62 years. Its dividend has increased from 40 cents per share in 2002 to $1.76 per share in 2022, with an annual compounded growth rate of nearly 7.67%.
What is the best passive income?
- Dividend stocks.
- Dividend index funds or ETFs.
- Bonds and bond funds.
- Real estate investment trusts (REITS)
- Money market funds.
- High-yield savings accounts.
- CDs.
- Buy a rental property.
- Verizon Communications VZ.
- Johnson & Johnson JNJ.
- Philip Morris International PM.
- Altria Group MO.
- Comcast CMCSA.
- Medtronic MDT.
- Pioneer Natural Resources PXD.
- Duke Energy DUK.
| Stock | Dividend yield | Dividend growth streak |
|---|---|---|
| Procter & Gamble Co. (PG) | 2.4% | 68 years |
| 3M Co. (MMM) | 6.5% | 65 years |
| Coca-Cola Co. (KO) | 3.3% | 61 years |
| Johnson & Johnson (JNJ) | 3.2% | 61 years |
The Company normally pays dividends four times a year, usually April 1, July 1, October 1 and December 15. Shareowners of record can elect to receive their dividend payments electronically or by check in the currency of their choice.
- Post Office Monthly Income Scheme.
- Long-Term Government Bonds.
- Corporate Deposits.
- Monthly Income Plans.
- Pradhan Mantri Vaya Vandana Yojana.
- Life Insurance Plus Saving.
- Systematic Withdrawal Plans.
- Equity Share Dividends.
| Symbol | Company Name | Div. Yield |
|---|---|---|
| PECO | Phillips Edison & Company, Inc. | 3.56% |
| APLE | Apple Hospitality REIT, Inc. | 5.69% |
| SLG | SL Green Realty Corp. | 6.54% |
| EPR | EPR Properties | 8.30% |
To have a perfect portfolio to generate $1000/month in dividends, one should have at least 30 stocks in at least 10 different sectors. No stock should not be more than 3.33% of your portfolio. If each stock generates around $400 in dividend income per year, 30 of each will generate $12,000 a year or $1000/month.
Stocks in the S&P 500 index currently yield about 1.5% on aggregate. That means, if you have $1 million invested in a mutual fund or exchange-traded fund that tracks the index, you could expect annual dividend income of about $15,000.
| Stock | Dividend yield |
|---|---|
| Coca-Cola Co. (ticker: KO) | 3.2% |
| JD.com Inc. (JD) | 2.8% |
| CK Hutchinson Holdings Ltd. (OTC: CKHUY) | 7.0% |
| Bank of Nova Scotia (BNS) | 6.3% |
To generate $5,000 per month in dividends, you would need a portfolio value of approximately $1 million invested in stocks with an average dividend yield of 5%. For example, Johnson & Johnson stock currently yields 2.7% annually. $1 million invested would generate about $27,000 per year or $2,250 per month.
What is the safest monthly dividend stock?
Monthly Dividend Stock #1: Realty Income
The most popular company on our list of monthly dividend stocks, Realty Income (O) has been in business since 1969 and is one of the best recession-proof stocks with dividends.
| Ticker | Name | Dividend Safety |
|---|---|---|
| ENB | Enbridge | Safe |
| EPD | Enterprise Products Partners | Safe |
| T | AT&T | Borderline Safe |
| VZ | Verizon | Safe |
Dividend yield of at least 2.7%.
Investors looking for monthly dividend income are likely looking for a yield that is substantially higher than the market average. Stocks with a dividend yield of 2.7% or higher have payouts that are more than a percentage point higher than the S&P 500 average yield of 1.64%.
A massive passive income stream
Berkshire currently owns 400 million shares of Coca-Cola. This means that on an annualized basis, Warren Buffett's company generates $736 million in dividend income from the beverage giant. That is a huge passive income stream that likely explains why Buffett isn't exiting the position.
The table below shows the present value (PV) of $1,000 in 20 years for interest rates from 2% to 30%. As you will see, the future value of $1,000 over 20 years can range from $1,485.95 to $190,049.64.
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