Income Investors: Start Investing With $50 at a $0 Trading Cost!

Start investing with $0 cost and begin generating passive income from dividend stocks immediately!

stock research, analyze data

Image source: Getty Images

You might recall the days when there were bank ads about investing as little as $50 each month in mutual funds. Now you can invest in stocks, ETFs, and index funds with $50 or less for a $0 trading cost!

Specifically, you can invest as much or as little as you like for each commission-free trade at Wealthsimple, as long as the amount covers one share or more of what you’re buying.

For instance, if you like Enbridge stock for its 6.7% yield, you can buy one share for less than $50, as the stock trades at $49.97 per share at writing.

Previously, because of trading fees, it took at least a $10,000 portfolio spread equally across 10 stocks with little correlation for a portfolio to be diversified. Or new investors started investing with mutual funds and ETFs to ensure sufficient diversity.

Now, there’s the option for income investors to start a diversified dividend portfolio from day one with little money. And they are free to buy more shares to average into their position every day if they wanted to, because it’s free to trade!

Income investors should start with TSX stocks

Canadian income investors will want to start with TSX stocks — that is, no U.S. stocks or stocks from the TSX Venture Exchange (TSXV).

Wealthsimple, like any other trading platform, charges a foreign exchange fee. Its fee is already low at 1.5% compared with other platforms, but it’s still a fee nonetheless. To keep as much money in your pocket working hard for you, it would be smart to buy TSX dividend stocks to build the scale of your portfolio. All dividends received can be pooled with your monthly contributions to be invested manually.

The TSXV is a public venture capital marketplace for emerging companies. So, the stocks there are higher risk than the more established companies on the TSX. Therefore, the dividends paid by TSXV stocks could also be riskier. Although some do graduate from the TSXV to the TSX (sometimes with explosive growth), one can only guess which ones will be winners.

$0 cost gives you ultimate flexibility

Since it costs $0 to trade, you have the ultimate flexibility to build your portfolio by making small investments. Here’s what I suggest you do.

Identify wonderful businesses you want to own, ensuring it’s a diversified portfolio of stocks to generate a secure income in any market. Consider these industries or sectors: bank, insurance, telecom, REIT, technology, healthcare, utility, etc.

Because you can invest in small amounts, you never need to force yourself to buy any stocks immediately. The market will always provide buying opportunities for patient investors. So, you can first invest in dividend stocks that are trading at good valuations to get your juicy passive income started. Then, wait for “buy-the-dip” opportunities in the other ones.

Because it’s commission-free to trade, you might even be more relaxed with the stock valuation. So, you might buy stocks that are fairly valued or better. Other than Enbridge, Fortis, Bank of Nova Scotia, TELUS, and H&R REIT are also safe dividend stocks that are at least fairly valued.

The Foolish takeaway

Costing $0 to trade, investors can easily invest in great stocks every month by putting excess cash into wonderful businesses. It would be like saving money in a piggy bank, except the expected long-term returns and income-generation potential are much greater.

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.

The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends BANK OF NOVA SCOTIA, FORTIS INC, and TELUS CORPORATION. Fool contributor Kay Ng owns shares of Fortis.

More on Dividend Stocks

young woman celebrating a victory while working with mobile phone in the office
Dividend Stocks

3 CRA Benefits Most Canadians Can Grab in 2024

You can save on taxes by claiming the dividend tax credit on Fortis Inc (TSX:FTS) shares.

Read more »

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »