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 52-week highs.

| More on:
edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.

Image source: Getty Images

If you’re looking to create passive income from investing in a solid dividend stock, there are quite a few things to consider. Of course, the first point of contention is how much can you and should you invest in the first place?

With that in mind, most of your portfolio should be structured with the help of your financial advisor. There should then be a bit left over each month for you to put towards investments, such as a solid dividend stock. And if you have a fair amount to invest from years of savings, then now is a great time.

Consider the market

The first consideration you need to make is looking at the market when deciding on the dividend stock you’re going to buy. This might sound obvious, but you also may misunderstand me. Right now is a bear market that’s likely headed towards a recession. But rather than thinking it’s a poor time to buy, it’s a great time if you find the right dividend stock.

Of course, you need to consider what could do well or at least survive well enough during a recession if you need the money. If you don’t, what company could create long-term gains by purchasing them today at lower prices?

For me, that means going essential. Whether it’s basic materials, utilities, healthcare, or other essential services, you want to look for companies that will be necessary no matter what happens. That includes during a recession. But here’s a top choice to consider.

Consider this dividend stock

If you want an essential company that’s going to provide you with a solid dividend, then I would look to NorthWest Healthcare Properties (TSX:NWH.UN) as a great long-term option. The company has stable cash flow coming in from the leasing of healthcare properties around the world. It has a 14-year average lease agreement as well as a 97% occupancy rate.

NorthWest stock is also a steal. Shares are down about 40% at the time of writing. You can therefore get a dividend yield at 9.56% — all while it’s trading at 7.38 times earnings!

Now, how much would you need to invest in this dividend stock to create that $400 per month?

Consider the cost

The reason I’m going with NorthWest here is because it’s so darn cheap. That’s in terms of valuation but also cost in general. You can pick it up as of writing at just $8.56 per share. So, let’s now compare what you would pay now compared to what you would have paid at 52-week highs for $400 per month.

NWH.UN — Now$8.566,000$0.80$4,800Monthly$51,360
NWH.UN — Highs$146,000$0.80$4,800Monthly$84,000

That’s right; you save over $30,000 if you want to create $400 per month in passive income. Furthermore, this could be cash set aside in your TFSA, meaning it would be all tax free, with plenty left over for other investments.

Again, just make sure most of your investments are put in low-risk, conservative choices that are done alongside the advice of your financial advisor. If so, you’ll be set up for a long life of solid income.

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 Amy Legate-Wolfe has positions in NorthWest Healthcare Properties Real Estate Investment Trust. The Motley Fool recommends NorthWest Healthcare Properties Real Estate Investment Trust. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Pixelated acronym REIT made from cubes, mosaic pattern
Dividend Stocks

The Top Canadian REITs to Buy in June 2023

Canadian investors looking for passive income from real estate investing can consider these top Canadian REITs for monthly income.

Read more »

Retirement plan
Dividend Stocks

Planning for Retirement? Here Are the Best Canadian Dividend Stocks to Buy

Buying two of the best Canadian dividend stocks now for the long term can help you retire without financial worries.

Read more »

investment research
Dividend Stocks

A Dividend Giant I’d Buy Over TD Bank Stock

Energy and financials are the TSX’s sector heavyweights, but I’d choose a dividend giant in the former over a big…

Read more »

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

2 Dividend Stocks Worth a Permanent Spot in My TFSA

Restaurant Brands International (TSX:QSR) and Berkshire Hathaway (NYSE:BRK.B) are two of my top TFSA holdings that I intend to hold…

Read more »

Increasing yield
Dividend Stocks

3 Canadian Dividend Stocks Offering High Yields and Reliable Income

These valuable dividend stocks offer solid deals right now, with ultra-high yields that will certainly last well beyond this downturn.

Read more »

potted green plant grows up in arrow shape
Dividend Stocks

Best of Both Worlds: 3 Growth Stocks That Also Pay Dividends

Dividend stocks are great until a downturn ends. But luckily, these three dividend stocks also offer a massive amount of…

Read more »

Payday ringed on a calendar
Dividend Stocks

Monthly Passive Income: 2 Top TSX Dividend Stocks to Buy in June 2023

Here are two of the best TSX monthly dividend stocks you can buy in June 2023.

Read more »

Female hand holding piggy bank. Save money and financial investment
Dividend Stocks

RRSP Wealth: 2 Great Canadian Dividend Stocks to Buy in June 2023

Top TSX dividend stocks are now on sale.

Read more »