If you’re wanting passive income right now, this article likely isn’t for you. If you’re looking for that much cash upfront, it’s going to take a massive investment. If that’s you and you’re reading this, you may not have that cash on hand right at this moment to invest in one TSX stock.
The long-term approach is far safer and more lucrative than any one-time investment could be. Let’s look at how you can get a shot at $10,000 in annual passive income through one TSX stock — safely.
Fit your budget
First off, if you’re going to invest in a TSX stock to create passive income like this, you’ll need to put aside money for it year after year. That means making sure that payment fits in your budget. Let’s say you have a salary at $60,000, which is just lower than the average Canadian salary as of 2021, according to Statistics Canada.
With that in mind, you decide you can afford to put aside 10% of your income each year towards this investment. Again, you should also have other investments. Don’t throw everything into one TSX stock!
From there, you put that $6,000 into a TSX stock, and choose to reinvest again and again. You take your dividends, and reinvest to create compound interest that climbs higher and higher over the years. But which stock should you choose?
A TSX stock to consider
If you’re seeking long-term, high-yield passive income, you may want to consider Chemtrade Logistics Income Fund (TSX:CHE.UN). Chemtrade stock has a history of having insanely high dividend yields. So this company may be a solid choice if you’re looking for the highest passive income for your shares.
Right now, Chemtrade stock offers a 6.54% dividend yield. This comes from being a cyclical stock, tending to do well when the market does. When the market improves therefore, Chemtrade stock may go down. But don’t worry! You can use that opportunity to buy more shares, drip-feeding in order to even out your investment over time and create more income.
This is why, during the next phase, we use the compound annual growth rate (CAGR) to look at what’s likely to happen in the next few years.
Using that CAGR
By using the CAGR, we can therefore see that Chemtrade stock has a CAGR of 7.32%, up 311% in the last 20 years alone. Using this data, and reinvesting that $6,000 and dividends along the way, let’s see how long it would take to reach $10,000 in annual passive income.
| Year | Shares Owned | Annual Dividend Per Share | Annual Dividend | After DRIP Value | Year End Shares Owned | Year End Stock Price | New Balance |
| 1 | 662 | $0.60 | $397.05 | $6,407.04 | 1321.18 | $9.72 | $12,846.07 |
| 2 | 1321.18 | $0.60 | $797.64 | $13,666.81 | 1974.82 | $10.43 | $20,607.14 |
| 3 | 1974.82 | $0.61 | $1,200.13 | $21,839.83 | 2620.67 | $11.20 | $29,348.27 |
| 4 | 2620.67 | $0.61 | $1,603.13 | $30,992.15 | 3256.68 | $12.02 | $39,140.45 |
| 5 | 3256.68 | $0.62 | $2,005.34 | $41,193.56 | 3881.03 | $12.90 | $50,058.64 |
| 6 | 3881.03 | $0.62 | $2,405.57 | $52,517.91 | 4492.15 | $13.84 | $62,182.20 |
| 7 | 4492.15 | $0.62 | $2,802.73 | $65,043.56 | 5088.64 | $14.86 | $75,595.30 |
| 8 | 5088.64 | $0.63 | $3,195.85 | $78,853.81 | 5669.36 | $15.94 | $90,387.38 |
| 9 | 5669.36 | $0.63 | $3,584.07 | $94,037.31 | 6233.35 | $17.11 | $106,653.66 |
| 10 | 6233.35 | $0.64 | $3,966.62 | $110,688.60 | 6779.84 | $18.36 | $124,495.65 |
| 11 | 6779.84 | $0.64 | $4,342.85 | $128,908.61 | 7308.23 | $19.71 | $144,021.69 |
| 12 | 7308.23 | $0.64 | $4,712.21 | $148,805.21 | 7818.11 | $21.15 | $165,347.60 |
| 13 | 7818.11 | $0.65 | $5,074.24 | $170,493.82 | 8309.19 | $22.70 | $188,597.27 |
| 14 | 8309.19 | $0.65 | $5,428.56 | $194,098.02 | 8781.33 | $24.36 | $213,903.34 |
| 15 | 8781.33 | $0.66 | $5,774.88 | $219,750.22 | 9234.5 | $26.14 | $241,407.95 |
| 16 | 9234.5 | $0.66 | $6,112.99 | $247,592.38 | 9668.8 | $28.06 | $271,263.44 |
| 17 | 9668.8 | $0.67 | $6,442.72 | $277,776.77 | 10084.39 | $30.11 | $303,633.25 |
| 18 | 10084.39 | $0.67 | $6,764.00 | $310,466.74 | 10481.55 | $32.31 | $338,692.70 |
| 19 | 10481.55 | $0.68 | $7,076.79 | $345,837.66 | 10860.61 | $34.68 | $376,629.96 |
| 20 | 10860.61 | $0.68 | $7,381.11 | $384,077.74 | 11221.94 | $37.22 | $417,647.05 |
| 21 | 11221.94 | $0.68 | $7,677.02 | $425,389.08 | 11566 | $39.94 | $461,960.85 |
| 22 | 11566 | $0.69 | $7,964.61 | $469,988.70 | 11893.25 | $42.86 | $509,804.23 |
| 23 | 11893.25 | $0.69 | $8,244.02 | $518,109.63 | 12204.22 | $46.00 | $561,427.30 |
| 24 | 12204.22 | $0.70 | $8,515.41 | $570,002.16 | 12499.44 | $49.37 | $617,098.64 |
| 25 | 12499.44 | $0.70 | $8,778.96 | $625,935.06 | 12779.45 | $52.98 | $677,106.68 |
| 26 | 12779.45 | $0.71 | $9,034.86 | $686,197.01 | 13044.84 | $56.86 | $741,761.21 |
| 27 | 13044.84 | $0.71 | $9,283.35 | $751,098.00 | 13296.16 | $61.02 | $811,394.93 |
| 28 | 13296.16 | $0.72 | $9,524.66 | $820,971.00 | 13533.99 | $65.49 | $886,365.10 |
| 29 | 13533.99 | $0.72 | $9,759.01 | $896,173.52 | 13758.91 | $70.29 | $967,055.44 |
As you can see, after 29 years, you’ll then have over $10,000 in passive income and almost $1 million in savings!
