Motley Fool investors need consistency in their lives. They need to know that no matter what, they’ll see a return from their investments. But if you’re only investing in trendy growth stocks, that’s simply not going to be the case.
That’s why passive income and value stocks have become so popular. You can look forward to dividends from both and look forward to cash from these stocks, even if shares go down.
But if you couple these types of stocks with my two tricks that take almost zero effort (a couple of clicks seems like zero effort to me), you can turn those funds into riches.
Consistency is key
As I said at the beginning of this article, Motley Fool investors want consistency. So, make you’re investing consistently as well! Whether you’re investing in a Registered Retirement Savings Plan (RRSP), Tax-Free Savings Account (TFSA), or anything else, you should be making consistent contributions.
But instead of trying to remember to put cash in each month or year, it’s far easier to set up pre-authorized contributions. You can even set up contributions to go towards your favourite passive-income stocks. That way, you’ll continue investing in companies you like, without any effort on your part.
Reinvest!
If you’re choosing passive-income stocks, then you’ll receive passive income each quarter or even each month. If that’s the case, don’t just take out the cash but reinvest it! Again, you can create automatic contributions to reinvest your dividend income. That way you don’t even have to think about it, and you receive even more passive income as your shares grow.
Better still, this is now cash on top of the consistent investing you’re doing. Together, these tricks have proven to be a solid way to invest in strong companies. Even if shares dip, over time they climb. So, if you invest long term, you could see your shares create riches beyond your wildest dreams. All for basically zero effort.
For example
Let’s take one of my favourite companies, NorthWest Healthcare Properties REIT (TSX:NWH.UN), for example. This company has been growing steadily over the last several years. It’s invested in essential businesses in the healthcare sector. This sector continued to perform well, even during the pandemic, and continues to this day.
In fact, NorthWest recently achieved record results during its latest earnings quarter, increasing its net asset value 11% year over year. Take that with a valuable share price trading at 6.4 times earnings, and a 6.43% dividend yield, and you’ve got a great option.
So, let’s say you were to invest $20,000 into NorthWest today. You set up automatic contributions and reinvest dividends. Those contributions could be around 10% of each paycheque — let’s say $500 per month.
Even at the incredibly conservative growth levels the company has experienced, you could reach $204,000 in 14 years by using this strategy!
Bottom line
This is merely an example, and there are lots of passive-income stocks out there that could also achieve these results. But by keeping it consistent and reinvesting dividends, you can turn even a small amount of investment into riches.
