Stock market investing is an excellent way to achieve your financial goals. If you play your cards right, you can use the power of investing in creating a passive-income stream that bolsters your active income. Dividend investing is a popular strategy for many stock market investors. By choosing the right dividend stocks to build such a portfolio, you can generate a substantial monthly amount through payouts alone.
Creating a well-diversified, self-directed portfolio of income-generating assets can help you achieve financial freedom. Today, I will discuss a hypothetical situation to explain how you can use the power of dividend investing to earn a substantial passive income.
To keep things simple, I will discuss one TSX dividend stock you can invest in. However, you must remember that you should never put all your eggs in one basket. By understanding its basic concept, you might be better equipped to start building your own passive-income stream through dividend investing.
What you need for a $1,000/month passive-income portfolio
Before discussing the numbers, let’s determine what you need to build a $1,000/month passive-income portfolio. Your dividend income portfolio must have a decent dividend yield. To keep adding money to your portfolio every month, you must invest in an income-generating asset that reliably distributes payouts to its investors on a monthly schedule.
For this post, I will discuss Granite REIT (TSX:GRT.UN), a $5.09 billion market capitalization real estate investment trust (REIT). REITs effectively allow investors to become lazy landlords to generate monthly income by remaining invested. REITs own, develop, and operate a portfolio of properties, creating revenue through rental income.
Granite REIT is a trust headquartered in Toronto that owns, acquires, develops, and manages a portfolio of industrial, warehouse, and logistics properties diversified across North America and Europe. Granite REIT is largely considered a defensive asset due to its stable revenue streams.
The trust has over 128 properties under its belt and an additional three million square feet of projects under development. Considering its immense strength, Granite REIT can comfortably fund its monthly payouts and grow them for years to come.
As of this writing, Granite REIT trades for $79.70 per share and boasts an annualized 4.02% dividend yield that it pays out on a monthly schedule.
How many Granite REIT shares you might need to own for $1,000/month in passive income
Granite REIT distributed $0.2583 per share to its investors in its latest payout. Assuming it continues paying its shareholders regularly at this rate, let’s look at the table below to determine how many shares you might need to own to generate $1,000 per month.
|Company||Recent Price||Number of Shares||Investment||Dividend Per Share||Total Monthly Payout||Dividend Yield|
Looking at the investment it will require, you might feel overwhelmed at how you can do it. However, this is only an example of the kind of portfolio you want to build to generate $1,000/month through dividends alone. To achieve this, you must create a well-diversified portfolio of dividend stocks, building it up gradually to eventually start earning that much.
Due to its solid business model, immense growth potential, strong exposure to a diversified real estate segment, and potential to increase payouts, Granite REIT can be an excellent stock to establish the foundations of a $1,000/month dividend income portfolio.