How to Grow a $51,000 Portfolio With $200/Month in Passive Income

What if you could determine your portfolio’s returns? Here’s what you need to get $200/month on a $51,000 portfolio.

| More on:
grow money, wealth build

Image source: Getty Images

As you sow, so shall you reap. You can’t expect apples if you plant a peach tree. Most people lose money in stocks because of unrealistic expectations. The stock market has something for everyone. There are growth stocks that could make a $5,000 Tax-Free Savings Account (TFSA) portfolio into $50,000 in five years, and there are stocks that could give you passive income. Invest in stocks knowing what to expect from them. 

The math: Converting $500/month to $51,000 +$213/month in passive income 

Create a desired outcome of a $51,000 TFSA portfolio that gives $200 in monthly passive income. Once you have a realistic outcome, you can check what is available. 

The Toronto Stock Exchange has some good dividend stocks paying an average annual yield of 5%. Some real estate stocks also pay dividend yields more than a 7%. But it is better to take a conservative estimate.

YearContributionDividendsTotal Amount
2023$6,000.0 $6,000.0
How to convert $500/month to $51,000

Suppose you start investing $500/month in 2023, accumulating $6,000 by the end of the year. 

In 2024, your $6,000 will earn you $300 ($6,000 x 5%) in dividend income. If you invest through TFSA, you can reinvest the entire $300 without worrying about taxes. By the end of 2024, you will invest an additional $6,000 and get $300 in dividend income. 

At the start of 2025, you will have $6,300 from 2023 and $6,000 from 2024, which will fetch you a 5% dividend income of $615. If you continue this cycle for seven years, you can earn $213 in monthly passive income, or $2,564.7 annually, and have a portfolio of over $51,000. 

Which stock can help you achieve $51,000+$213/month in passive income?

Dividend Aristocrats

The TSX has Dividend Aristocrats, like BCE (TSX:BCE), Enbridge, and TC Energy, that have histories of paying regular dividends but have also grown them for more than a decade. Pipeline stocks like Enbridge and TC Energy have slowed their dividend growth, but telecom giant BCE is heading strong with 5% dividend growth and has a five-year average dividend yield of 5.5%. 

The bearish market that began in March 2022 with an interest rate hike has pulled BCE stock down 17%. The stock price dip pulled the dividend yield to 6.37%. Now is a good time to invest a larger amount and lock in a higher dividend yield before the stock rebounds. The stock also offers a dividend-reinvestment plan (DRIP) that can automate the reinvestment part. The 5% dividend growth could help you reach your 51,000+$213/month passive-income goal faster. 

But it is not wise to invest all your money in one stock. BCE is facing competitive pressure from the merger of Rogers and Shaw Communications. Diversify across asset classes. 

High-dividend stocks 

You can invest money in high-dividend retail or commercial real estate investment trusts (REITs) like True North Commercial REIT (TSX:TNT.UN) or renewable energy stocks like TransAlta Renewables

True North Commercial REIT has 47 commercial properties with a 95% occupancy rate. It earns 80% of its monthly rental income from the government and high-credit-ranking companies. However, rising interest rates have reduced the fair market value of REIT properties. Rising rates have reduced the REIT’s ability to raise capital against its properties but has had no impact on its operating cash flow. Hence, it maintained its monthly distributions at $0.0495 while the stock has fallen over 16% since March 2022. 

The stock price dip inflated the REIT’s distribution yield to 9.7%. With high yield comes a greater risk of a distribution cut. Until the REIT slashes the distribution yield, you can enjoy a higher yield. 

Investing tip

Remember, the above expectations are based on the current market conditions. They could change with changing scenarios. So, keep revisiting your portfolio frequently and update your expectations accordingly. Exit when the stock can no longer give you the minimum growth and dividend you expect from the stock. 

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 Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge and Rogers Communications. The Motley Fool has a disclosure policy.

More on Dividend Stocks

edit Woman calculating figures next to a laptop
Dividend Stocks

Get 25% Off This TSX All-Star Stock Today and Hold it for Life

If you're looking for a long-term hold, it doesn't get much better than this dividend stock, which is down 25%…

Read more »

analyze data
Dividend Stocks

Better RRSP Buy: BCE Stock or Enbridge Stock?

BCE and Enbridge look like cheap stocks today for RRSP investors.

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

TFSA: 3 of the Best Canadian Dividend Stocks to Buy This Year

These three Canadian dividend stocks are some of the best to buy for the long haul and have tremendous potential…

Read more »

Young woman sat at laptop by a window
Dividend Stocks

Why I’ll Continue Drip-Feeding This Superb Dividend Stock, Recession or Not

There is a long history of this dividend stock bouncing back post recession, which is why I'll continue to drip-feed…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

TFSA Investors: Earn $60/Month With These 2 Top Dividend Stocks

BCE stock is one of two top dividend stocks that can help you achieve your tax-free income goals in your…

Read more »

financial freedom sign
Dividend Stocks

TFSA Investors: 2 TSX Stocks for a Legit Shot at $1 Million in 20 Years

Save and invest regularly in a diversified group of solid stocks for a legitimate chance of hitting $1 million and…

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Dividend Stocks

How Much Do You Need to Invest to Get $400 a Month in Dividends?

Creating passive income this high doesn't come cheap, but you can still save about $30,000 investing today rather than at…

Read more »

bulb idea thinking
Dividend Stocks

Dividend Investors: 2 Stocks for Decades of Passive Income

Add these two TSX dividend stocks to your self-directed portfolio to generate passive income for decades.

Read more »