In a recent series of articles, I’ve explored my plan to get to $2,000 per year in passive income by the end of 2023. When I started the series, my brokers reported that I had $1,200 per year in tax-free passive income. Today, I’m at $1,701. By adding a few new investments as well as selling some old ones that didn’t pay dividends and re-investing the proceeds into dividend stocks, I’ve increased my annual passive income by $500/year. In this article, I will explain how I did it.
Dividend stocks
The main thing I’ve done in the last two months to increase my annual passive income was to invest in dividend stocks — notably, Toronto-Dominion Bank (TSX: TD) and Bank of America (NYSE: BAC). These are two bank stocks that I hold in my Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Account (TFSA).
TD Bank stock yields about 4%. Bank of America yields 2.5%. Currently, I own 137 shares of TD Bank and 260 shares of Bank of America, resulting in $830.2 in annual dividend income from these two stocks. Below is a series of tables showing how the math on that works out.
Table #1: TD and Bank of America dividends
| TD dividend per share (annual) | $3.84 |
| Bank of America dividend per share (annual) | $1.17 (converted from US$0.88) |
| Number of TD shares I own | 137 ($526 in dividends per year) |
| Number of BAC shares I own | 260 ($304 in dividends per year) |
Table #2: The math
| Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | Full year | |
| TD Bank dividends | $131.5 | $131.5 | $131.5 | $131.5 | $526 |
| Bank of America dividends | $76.05 | $76.05 | $76.05 | $76.05 | $304.2 |
| Combined | $207.55 | $207.55 | $207.55 | $207.55 | $830.2 |
So, that’s $830.2 per year in dividends just from TD and Bank of America. Plus, I own a variety of smaller dividend positions (both stocks and funds) that take the dividend income to $1,200. If you’re wondering how I got the total up to $1,700, read on, because in the next section, I’ll show where my passive income is coming from, apart from dividends.
Guaranteed Investment Certificates (GICs)
Apart from dividends, I also get some passive income from GICs. These are fixed-income investments that you buy from banks. Historically, they haven’t yielded much, but this year, you can find GICs yielding up to 5%. I currently have two 5% yielding GICs in my portfolio, one from EQB and one from Bank of Nova Scotia. Together, they add about $500 in projected annual income to my portfolio.
Foolish takeaway
So, there you have it. The way I got to $1,700 in annual passive income was by diligently investing in dividend stocks, funds, and GICs. It took me several years of saving to get this amount, but I got there.
The big takeaway here is that passive income is obtainable, but you’ll have to save a fair amount of money to get it. The portfolios that are paying me $1,700 per year are worth about $92,000 combined, so you’ll need to invest a fair amount of money to get a lot of dividend income coming in. Over a period of several years, it’s very doable. Just don’t expect a miracle overnight.
