Tue. Nov 12th, 2024

How Much Money To Invest For $5,000 Per Month In DIVIDENDS

How Much Money To Invest For $5,000 Per Month In DIVIDENDS

How much does someone need to invest in order to receive $5,000 per month in dividend income (or $60,000 annually in dividends)? Today's video explores a variety of different scenarios because there is not a single answer. More than anything, I introduce the concept of true dividend yield-on-cost, a powerful strategy that can help greatly reduce the amount of capital required to reach one's passive income goals.
#dividend #yield #passiveincome

Timestamps:
0:00 INTRODUCTION: $5,000 Per Month In True Dividend Passive Income
0:38 HOW MUCH DO I NEED TO INVEST TO RECEIVE $5,000 PER MONTH?
1:00 Scenario 1: About $700,000 invested if the income is needed immediately.
1:50 Scenario 2: About $200,000 invested, and then wait about 15 years.
2:08 DIVIDEND YIELD ON COST
2:20 Four Pillars of Dividend Yield On Cost
2:46 SCENARIO 1: IMMEDIATE CASH FLOW ($5,000 PER MONTH)
3:32 Formula Indicating How Much To Invest
3:51 SCHD, a lower-risk option
4:20 $1,764,705.88 is required for the lower-risk investor, for someone who needs $5,000/month immediately
5:25 SCENARIO 1B: High-yield, higher-risk option
6:13 Formula (now divides by 8.4%)
6:26 $714,285.71 is required for the higher-risk investor, for someone who needs $5,000/month immediately
7:27 Comparison of scenarios 1a and 1b
8:34 By taking on more risk (via higher yield), the investor can get to $5,000/month with 40% of the original capital required
9:17 SCENARIO 2: UTILIZING TRUE DIVIDEND YIELD ON COST
10:25 On average, SCHD increases the dividend by 12% per year.
10:42 BTI is growing the dividend by 2.64% per year on average.
10:57 See the pinned comment for my affiliate link to Blossom Social.
11:47 SCENARIO 2a: SCHD
13:00 $439,294.25 is required if the investor is willing to wait 10 years (and the dividend growth holds up)
13:15 KEY: The investor waited 10 years. The dividend reinvested, and the dividend kept growing!
14:19 Check out the pinned comment for a link to my Patreon.
15:00 If the investor can wait 15 years, only $189,239.93 may be required as a lump-sum investment in year 1.
15:12 Will 12% dividend growth keep up? Numbers must be looked at as directional.
16:20 In practice, most investors are not just lump sum investing. Many investors will keep adding more capital, over time.
17:15 KEY: Most times, spreadsheets can over-estimate dividend growth.
17:50 SCENARIO 2b: BTI
18:52 $296,050.56 lump sum required in year 1 to drive $5,000/month in year 10.
19:30 This model does not account for inflation. This model is direction. It’s meant to show how it all works. It's impossible to tell the future.
19:54 I believe this model is ore realistic than the SCHD one. I'm not relying on dividend growth too much. I'm relying on the existing dividend.
20:37 TRUE DIVIDEND YIELD ON COST
21:30 In year 15, my model shows a possible 30% dividend yield-on-cost.
21:40 KEY: ALL models in my video today are just hypothetical. They are just directional. We cannot know what the future holds.
22:27 Yield-on-cost takes the requirement down to about $200,000-$400,000 for $5000/month.
23:12 Dividend investing is not easy.
23:19 SUMMARY
25:28 DISCLOSURE AND DISCLAIMER

DISCLOSURE: I am long British American (BTI) and SCHD. I own this stock and ETF in my personal dividend stock portfolio.

DISCLAIMER: All information and data on my YouTube Channel, blog, email newsletters, white papers, Excel files, and other materials is solely for informational purposes. I make no representations as to the accuracy, completeness, suitability or validity of any information. I will not be liable for any errors, omissions, losses, injuries or damages arising from its display or use. All information is provided AS IS with no warranties, and confers no rights. I will not be responsible for the accuracy of material that is linked on this site.

Because the information herein is based on my personal opinion and experience, it should not be considered professional financial investment advice or tax advice. The ideas and strategies that I provide should never be used without first assessing your own personal/financial situation, or without consulting a financial and/or tax professional. My thoughts and opinions may also change from time to time as I acquire more knowledge. These are, as discussed above, solely my thoughts and opinions. I reserve the right to delete any comments for any reason (abusive in nature, contain profanity, etc.). Your continued reading/use of my YouTube Channel, blog, email newsletters, whitepapers, Excel files, and other materials constitutes your agreement with and acceptance of this disclaimer.

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