How much invested to earn $1,000 a month in dividends?
A question I get asked a lot is “Hey DI, how much do I need to have invested to earn $1,000 every month in dividends?”
I am a math guy, so when you look at the numbers, they tell the whole story. One of my favorite sayings a college coach of mine had was:
So if we run the numbers, we can find out how much we need to have invested to earn $1,000 every month in dividends.
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Before we talk numbers, understand this…
It is never smart to chase dividend yield. The smart thing to do (unless you are at or near retirement age) is to focus on total return. What I mean by that is this: It does no good to invest in a stock that has a 10% dividend yield if it has a -30% return every year (on average), compared to a stock that has a 1% dividend yield and grows at 4% every year (on average). Over time, chasing that higher yield will not outpace the growth of the total return stock. With that being said, here we go.
To find out how much you need invested to earn $1,000 every month in dividends is as simple as knowing two numbers:
What is your annual dividend income goal?
What is your portfolio dividend yield?
Once you know those two things, it is a simple calculation:
Annual dividend income goal / portfolio dividend yield = Portfolio value needed
So, if your goal is to get $1,000 a month in dividends, that is $12,000 a year in dividends. Here would be what your portfolio value would need to be:
$12,000 annual dividend income / 3% portfolio yield = $400,000
$12,000 annual dividend income / 4% portfolio yield = $300,000
$12,000 annual dividend income / 5% portfolio yield = $240,000
$12,000 annual dividend income / 6% portfolio yield = $200,000
For me, I just crossed over that $12,000 a year dividend income, as you can see here:
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Then, once you get those dividends, turbocharge them by reinvesting your dividends to get even MORE 😉
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My Buys This Week:
ETFs: $250 in VOO +
(x)Tweet of the Week:
Keep going! I want to see you win!
If you aren’t where you want to be, keep going. One thing I’ve learned from the many millionaire mentors I have is this: Nothing happens overnight. Becoming a millionaire isn’t easy. But it’s possible if you just don’t give up. Most people quit before they even get started.
— Decade Investor💸 (@DecadeInvestor)
Aug 30, 2023
Thank you so much for reading & I will see you next week! Until then, keep buying assets & stacking those dividends. 🙂
- Decade Investor