There’s a reason I’ve put “job” in quotes today. While you might end up creating enough fixed income after this to sustain a side hustle, it will be hardly any work at all.
In fact, today, we’re looking at the opposite of work. I’ll talk about creating funds through passive income, where investors can reinvest into a stock again and again until they have enough fixed income coming in that it’s as if they have a job on the side.
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Look for strong monthly stocks
Even during downturns, there are certain monthly-paying dividend stocks that are solid companies to consider. These tend to be in sectors like consumer staples, utilities and healthcare. Today, we’re going to look at a healthcare operator: Sienna Senior Living (TSX: SIA).
Sienna stock is of strong consideration for those looking at growth over the next few years and decades. As the baby boomer population continues to age, there will be high demand for senior living facilities. Whether it’s long-term care or simply a residence, Sienna stock is likely to continue expanding its operations. And it already has!
In its most recent earnings report, Sienna stock reported net operating income increased by 9.9% year over year. This included an 11% increase in its retirement segment and 9.1% from its long-term-care segment. Occupancy also rose, with the average same-property occupancy up to 88.2% from retirement residences and 96.8% from its long-term-care facilities.
Creating part-time income
To create part-time income, it’s either going to take a lot of cash upfront or feeding into an investment over time. To do that, we’ll need to know the compound annual growth rate (CAGR) of Sienna stock’s dividend and share price.
Right now, the stock offers a dividend yield of 8.36%. That dividend has risen by a CAGR of 0.44% in the last decade. Its share price, meanwhile, has risen at a CAGR of 1.23% as of writing. It’s important to note that we continue to experience poor market conditions, which allows for perhaps more returns. However, this will therefore be a conservative result.
Now, let’s say you were able to invest $8,000 per year in this stock over the next decade. Here is what that could provide you in annual income, reinvesting dividends as you go.
| Year | Start Balance | Shares, including contributions and DRIP | Share Price | Contrib | Growth in returns | Dividends | Reinvested | End Balance |
|---|---|---|---|---|---|---|---|---|
| 1 | $8,000.00 | 706.090 | $11.33 | $8,000.04 | $98.40 | $662.40 | $662.40 | $16,760.84 |
| 2 | $16,760.84 | 1,461.358 | $11.47 | $8,000.04 | $206.16 | $665.31 | $665.31 | $25,632.35 |
| 3 | $25,632.35 | 2,207.700 | $11.61 | $8,000.04 | $315.28 | $1,383.03 | $1,383.03 | $35,330.70 |
| 4 | $35,330.70 | 3,006.039 | $11.75 | $8,000.04 | $434.57 | $2,098.56 | $2,098.56 | $45,863.86 |
| 5 | $45,863.86 | 3,854.817 | $11.90 | $8,000.04 | $564.13 | $2,870.00 | $2,870.00 | $57,298.02 |
| 6 | $57,298.02 | 4,757.333 | $12.04 | $8,000.04 | $704.77 | $3,696.56 | $3,696.56 | $69,699.39 |
| 7 | $69,699.39 | 5,716.677 | $12.19 | $8,000.04 | $857.30 | $4,582.09 | $4,582.09 | $83,138.82 |
| 8 | $83,138.82 | 6,736.112 | $12.34 | $8,000.04 | $1,022.61 | $5,530.33 | $5,530.33 | $97,691.80 |
| 9 | $97,691.80 | 7,819.056 | $12.49 | $8,000.04 | $1,201.61 | $6,545.20 | $6,545.20 | $113,438.65 |
| 10 | $113,438.65 | 8,969.082 | $12.65 | $8,000.04 | $1,395.30 | $7,630.88 | $7,630.88 | $130,464.87 |
All in all, by investing this amount, you could have a conservative amount of $7,630.88 each year. This would create a nice little side hustle, which will only grow with time. And that’s not even including returns on your investment!
