Passive Income: How Much do You Need to Invest to Make $750/Month

Passive income doesn’t need to just include dividends. In fact, this top stock proves that again and again!

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Investing for passive income can be a thrilling journey, combining the excitement of watching your wealth grow with the satisfaction of seeing those dividend payments roll in. When you’re eyeing investments for passive income, it’s crucial to consider both the returns and the dividends.  And that’s just what we’re going to do today.

Look at both

First off, returns are like the engine that drives your investment vehicle. They include capital gains (the increase in the value of your investments over time) and dividends (the regular income you receive from your investments). When you choose investments with solid returns, you’re setting yourself up for a lucrative ride. 

But here’s the fun part: you don’t have to be a financial wizard to spot good returns. Look for companies with a track record of steady growth and sound financial health. If the stock price steadily climbs, you’re likely in good hands.

Now, let’s talk dividends—the cherry on top of your investment sundae. Dividends are regular payments made by companies to their shareholders, typically from profits. They’re like a thank-you note with a cheque inside. When selecting dividend stocks, aim for companies that not only pay dividends but also have a history of increasing them. This increase shows they’re doing well and likely to keep those payments coming.

Balancing these two elements—returns and dividends—can create a robust passive income stream. Think of it like planting a garden. The returns are your plants growing taller and stronger, while the dividends are the fruits and vegetables you get to harvest regularly. To make the most of this garden, diversify your investments. Mix in some high-return growth stocks with reliable dividend payers. This blend helps cushion against market volatility and ensures you have a steady flow of income.

A stock that does it all 

A fantastic option for investors would be goeasy (TSX:GSY) for both returns and dividends. The company specializes in providing non-prime leasing and lending services through its easyhome and easyfinancial divisions. This focus on non-prime customers means goeasy taps into a unique market segment that’s underserved by traditional banks. It’s like being the hero for those who need financial help but don’t fit the conventional mould.

Over the past few years, goeasy has consistently delivered double-digit revenue growth. For instance, in 2023, the company reported a revenue of approximately $1.2 billion, up from $962 million in 2022. In the most recent fiscal year, goeasy reported a net income of around $230 million, which represents a healthy increase from $190 million the previous year. This growth in net income shows that goeasy is not just growing its top line but also effectively managing its costs and improving its profitability.

Revenue is expected to grow at a compound annual growth rate (CAGR) of around 15% over the next few years. This anticipated growth is driven by both an increase in customer numbers and higher loan balances per customer.

Bottom line

Now goeasy stock should continue to do well. So let’s say that we continue to see it grow by its historic compound annual growth rate (CAGR) of 35% over the last decade. To achieve passive income of $750 a month you’ll need $9,000! Here is how that might shake out.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCYPORTFOLIO TOTAL
GSY – now$188.50130$4.68$608.40quarterly$24,505
GSY – 35%$254.49130$4.68$608.40quarterly$33,083.70

You would now have returns of $8,578.70 and dividends of $608.50! That’s total passive income of $9,187.20 or $765.60 every month.

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

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