If you’re looking to basically create a part-time job from passive income, then it could take an enormous investment. This would be the case if you were to throw everything you have at one stock, and create $12,000 in annual passive income, or $1,000 per month.
Red flag!
But as I’m sure you can see, that would create a massive problem. You’ve put everything into one stock. In doing so, you would be taking a big risk! Most of your portfolio should be supported by long-term, safe investments that will grow slowly but surely over time.
Then, between 5% and 10% of your portfolio could be set aside for more riskier choices. These could include investing in a sole equity asset. Again, I’m not saying you use every penny of that 10%, but at least you’re supported by the rest of your investment portfolio.
It might then seem that this would in no way help you achieve $12,000 in annual passive income from one stock alone. But it certainly can. It just takes long-term, consistent investing and reinvesting dividends. By doing so, you can certainly reach this goal eventually.
A solid choice
One choice you could make is Slate Grocery REIT (TSX: SGR.UN), which currently offers a dividend yield at 8.42% as of writing. Furthermore, it’s a steal! The stock currently trades at only 4.8 times earnings as of writing as well. So you get a deal on a great company, with a massive dividend.
The reason it’s a great company is because Slate stock is a real estate investment trust (REIT) that focuses on grocery-anchored chains throughout the United States. These are essential services that the company has proven will remain successful. So much so that it continues to find new opportunities to acquire.
Creating $12,000 in annual passive income
Let’s do some comparisons. Below you can find a chart that will show you exactly how much you would need to invest to create $12,000 in annual passive income today.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
| SGR.UN | $13.59 | 10,169 | $1.18 | $12,000 | monthly | $138,204 |
That is a massive investment in one stock. Something I would not recommend. So let’s see what would happen if you instead chose to invest just $6,000 at first, and added another $3,000 year after year. Based on historical growth in dividends and share price, here is what that could look like.
| Year | Shares Owned | Annual Dividend Per Share | Annual Dividend | After DRIP Value | Annual Contribution | Year End Shares Owned | Year End Stock Price | New Balance |
|---|---|---|---|---|---|---|---|---|
| 1 | 442.00 | C$1.14 | C$505.77 | C$6,532.53 | C$3,000.00 | 693.88 | C$14.00 | C$9,712.74 |
| 2 | 693.88 | C$1.16 | C$807.65 | C$10,551.89 | C$3,000.00 | 960.16 | C$14.42 | C$13,843.27 |
| 3 | 960.16 | C$1.18 | C$1,136.81 | C$15,023.86 | C$3,000.00 | 1241.68 | C$14.85 | C$18,439.16 |
| 4 | 1241.68 | C$1.20 | C$1,495.41 | C$19,991.43 | C$3,000.00 | 1539.30 | C$15.30 | C$23,544.60 |
| 5 | 1539.30 | C$1.23 | C$1,885.73 | C$25,501.12 | C$3,000.00 | 1853.91 | C$15.75 | C$29,207.46 |
| 6 | 1853.91 | C$1.25 | C$2,310.21 | C$31,603.29 | C$3,000.00 | 2186.43 | C$16.23 | C$35,479.51 |
| 7 | 2186.43 | C$1.27 | C$2,771.43 | C$38,352.36 | C$3,000.00 | 2537.80 | C$16.71 | C$42,416.74 |
| 8 | 2537.80 | C$1.29 | C$3,272.15 | C$45,807.10 | C$3,000.00 | 2909.00 | C$17.22 | C$50,079.60 |
| 9 | 2909.00 | C$1.31 | C$3,815.28 | C$54,030.96 | C$3,000.00 | 3301.03 | C$17.73 | C$58,533.35 |
| 10 | 3301.03 | C$1.33 | C$4,403.90 | C$63,092.33 | C$3,000.00 | 3714.90 | C$18.26 | C$67,848.33 |
| 11 | 3714.90 | C$1.36 | C$5,041.30 | C$73,064.91 | C$3,000.00 | 4151.68 | C$18.81 | C$78,100.36 |
| 12 | 4151.68 | C$1.38 | C$5,730.94 | C$84,028.02 | C$3,000.00 | 4612.44 | C$19.38 | C$89,371.03 |
| 13 | 4612.44 | C$1.40 | C$6,476.47 | C$96,067.00 | C$3,000.00 | 5098.27 | C$19.96 | C$101,748.14 |
| 14 | 5098.27 | C$1.43 | C$7,281.77 | C$109,273.57 | C$3,000.00 | 5610.31 | C$20.56 | C$115,326.02 |
| 15 | 5610.31 | C$1.45 | C$8,150.93 | C$123,746.24 | C$3,000.00 | 6149.69 | C$21.17 | C$130,206.02 |
| 16 | 6149.69 | C$1.48 | C$9,088.25 | C$139,590.72 | C$3,000.00 | 6717.59 | C$21.81 | C$146,496.90 |
| 17 | 6717.59 | C$1.50 | C$10,098.26 | C$156,920.39 | C$3,000.00 | 7315.19 | C$22.46 | C$164,315.30 |
| 18 | 7315.19 | C$1.53 | C$11,185.75 | C$175,856.74 | C$3,000.00 | 7943.71 | C$23.14 | C$183,786.20 |
As you can see, after 18 years, you would end up with a portfolio worth $183,786.20! What’s more, you’ll have a total of 7,944 shares. With dividends at $1.53, that would create annual passive income of $12,154.32!
