How to Bring in $20,000 With Dividend Stocks Every Year!

You can bring in high, stable income by investing in strong dividend stocks like Enbridge stock (TSX:ENB)(NYSE:ENB) and one other.

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Dividend stocks are some of the best methods of buying into the market today. If you’re a long-term holder, not only can you look forward to returns, but you can also collect passive income no matter what the market is doing. All it takes is finding the right dividend stocks.

Luckily, right now is a prime buying opportunity for investors seeking dividend stocks. Companies due for a rebound trade at low levels as the pandemic slowly comes to a close. Before the market returns to pre-crash levels, dividend seekers should be buying strong dividend stocks in bulk.

If you have the cash, you can bring in $20,000 each and every year by simply investing in dividend stocks. But it gets even better. Let me show you how.

Dividend stocks: pick an aristocrat and king

If you want guaranteed dividends, you need to choose dividend stocks that have guaranteed payouts and increases. That’s what you get when investing in Enbridge Inc. (TSX:ENB)(NYSE:ENB) and Fortis Inc. (TSX:FTS)(NYSE:FTS). Enbridge stock is a Dividend Aristocrat, increasing its dividend every year for the last 25 years. Fortis stock is just a few months shy of becoming the first Dividend King on the TSX, doing the same for the last 50 years!

If investors have the cash available to invest in these dividend stocks, this is the ideal way to bring in dividends. While the initial investment might sting, a decade or so down the line will have you laughing with $20,000 coming in each year. Enbridge stock has increased its dividend by a compound annual growth rate (CAGR) of 14.32% in the last decade, while Fortis stock has increased 5.63% during that time.

So let’s get to the numbers.

How to get to $20,000 in dividends

It’s going to take a large investment to reach this number. But if you can afford it, it’s certainly worth it. You’ll receive passive income that’s practically guaranteed to grow each and every year you hold it. So here’s how it might shake out.

Let’s say you want $10,000 from Enbridge stock alone. Today it offers a 7.04% dividend yield as of writing. That would mean you would need 2,994 shares. At writing, that would cost investors $142,604.79.

As for Fortis stock, the company has a 3.68% dividend yield. To receive $10,000 in passive income, you would need 4,950 shares. That would take an investment of $271,732.67.

That’s a grand total of $414,337.46.

Expensive? Just wait

Yes, not everyone can afford half a million dollars. But for the case of this example, let’s also look at the returns you might receive from these dividend stocks. As Enbridge stock and Fortis stock are both strong companies, with long-term contracts that keep cash flow coming in, these are safe blue-chip companies you can hold for decades.

Each has seen substantial, stable growth during that time. Enbridge stock has grown at a CAGR of 9% in the last decade, with Fortis stock at 9.3%. So what might returns look like a decade from now from today’s investment?

If the same growth happens, 2,994 in Enbridge could be worth $557,667.04, collecting $224,536.36 in dividends during that time, accounting for the same growth. By reinvesting dividends, you could make $811,742.90!

As for Fortis stock, 4,950 could be worth $798,355.31 in a decade, while collecting $137,205.23 in dividends. By reinvesting, your portfolio could be worth $894,734.24!

So now you have a potential grand total of 1,706,477.14 in just a decade from a half million dollars investment. And the best news? These dividend stocks continue to be in value territory, with Enbridge stock trading at 1.8 times book value, and Fortis 1.5 times book value. So if you can afford it, enjoy that $20,000 per year from these dividend stocks.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe owns shares of ENBRIDGE INC. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends FORTIS INC.

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