Build the Best Passive Income Portfolio for $117.62 in Monthly Dividends With XDIV ETF

This ETF is perfect as a base for your monthly passive income portfolio, and here’s exactly how to get started and what to consider.

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The market looks like it’s certainly starting to recover. Though the economy still has a long way to go. So it’s no wonder that investors may be interested in creating passive income through a solid mix of stocks. This way they can get in on the action, while still creating passive income through dividends.

So how do you even get started? Today, we’re going to take a look at the process and a safe investment option to get you some gains.

What’s it for?

Before you even start investing, it’s important to figure out exactly what this investment is for! This alone is going to help you figure out where you want to invest, how much, how often, all of it. After all, if you’re investing for retirement, you may want to put your investment into a Registered Retirement Savings Plan (RRSP) to keep it safe. If you need it for a home, the First Home Buyers Savings Account (FHSA) is a great option.

However, one that pretty much ticks most boxes is the Tax-Free Savings Account (TFSA). That’s because no matter what happens in your life, you can take out the cash when you need it, tax free. So whether it’s a wedding or an emergency, those funds are yours for the taking.

Once you identify what your investment is for and where it needs to be, you’ll need numbers to go along with it. Work with your financial advisor to create a goal in mind. That way once you achieve it, you could work on another goal!

How much can you afford?

This is incredibly important. Ideally you’re starting early, investing often. Because if you do, you’ll be able to put aside a lot less and still reach your long-term goals. Yet if you’re nearing retirement or have another goal in mind, you’re going to have to likely put aside a lot more, and just as often.
If that’s the case, look over your income to see where you can cut back to reach those goals. Beyond that, it might be a good idea to seek out some passive income to fund your future investments.

Consider renting out your parking, asking for a raise, or selling some items to get you started! Just don’t make any drastic moves and put your income at risk.

Build that portfolio!

Now here I’m going to recommend a great investment as a base for your investment portfolio for passive income. But make sure you’re creating a diversified portfolio rather than putting all your eggs in one basket. Consider trading fees, management fees, and different assets to give yourself plenty of options.

But one I really like is iShares Core MSCI Canadian Quality Dividend Index (TSX:XDIV). This exchange-traded fund (ETF) is fantastic with a high yield and low fees. The company focuses on dividend-paying stocks that have a long history of paying out regular dividends. It prioritizes quality and stability, so companies with strong fundamentals and lower volatility.

What’s more, XDIV holds a dividend yield at 4.73% with shares up 8% in the last year! So if this happens again, here is what $10,000 invested could look like in just one year.

XDIV – now$26385$1.56$600.60monthly$10,000
XDIV – highs$28.08385$1.56$600.60monthly$10,810.80

Now you have returns of $810.80 and dividends of $600.60! That’s total passive income of $1,411.40, for monthly income of $117.62 as of writing.

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 no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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