How much do you need to invest to get $1,500 per month from dividend stocks? The short answer? It depends on your portfolio yield.
For example, if your dividend portfolio averages a yield of 5%, the portfolio size would need to be $360,000 (calculated by $1,500 * 12 months ÷ 0.05) to earn you an average of $1,500 per month. You can play with the “income per month” and “dividend yield” in this formula to see how it changes the amount you need to invest (assuming you’re starting from scratch) today.
How much do you need to invest in TD stock to earn $1,500/month?
New investors might have trouble understanding how much income they can earn from dividend stocks. Let’s take Toronto-Dominion Bank (TSX:TD) as an example. If you look it up on Yahoo Finance, you’ll see the “forward dividend & yield.”
Currently, it shows $4.08 for the “forward dividend,” which is the annualized dividend income you would get per share of TD stock you own. So, if you buy 100 shares at $79.59 per share at writing, it’d be an investment of $7,959 (plus any commission fees). The dividend yield would be almost 5.13% (calculated by $4.08 ÷ $79.59).
If TD stock were your only investment (which is not recommended, by the way), you would need to invest just over $351,132 at the recent quotation to make $1,500 per month, or actually $4,500 per quarter because the Canadian bank stock pays out quarterly dividends. Investors should aim to build a diversified portfolio of core, quality stocks. And TD can be one of these stocks.
TD stock seems like a good long-term investment today. It trades at a good valuation. Trading at a blended price-to-earnings ratio (P/E) of about 9.8 represents a discount of roughly 15% from its long-term normal P/E.
Importantly, it makes durable profits and has a track record of paying out safe and steadily growing dividends. For your reference, its three-, five-, 10-, 15-, and 20-year dividend-growth rates are between about 7% and 10%. Its last dividend hike was close to 6.3%.
Its dividend yield of over 5% also suggests it’s a good value versus its historical levels because as the stock price falls, the yield is pushed higher (if no dividend cut occurs).
TD stock price and dividend yield data by YCharts
What if you have more dividend stocks in your portfolio?
You can use a spreadsheet as a tool to help you calculate your portfolio yield. Here’s one way of doing it, demonstrated with a simple example. To keep it simple, we assume you’re invested in two stocks, and their market value right now happens to be $5,000 each, which would equate to just under 63 shares of TD and 84 shares in Fortis, which had a stock price of $59.40 at the market close yesterday.
| Stock | Market Value | Yield | Annual Income |
| TD Bank | $5,000 | 5.13% | $257 |
| Fortis | $5,000 | 3.97% | $199 |
| Portfolio | $10,000.00 | 4.55% | $455 |
For your own portfolio, you could use Google Sheets and use the googlefinance() function to help you grab the live price of a stock (e.g., =googlefinance(“TSE:TD”, “price”), which can then be used to calculate the market value of your stock holding based on the number of shares you own. By adding an “annualized dividend” column, you would be able to calculate the yield of each holding based on the market value and calculate the annual income you’d receive.
For the bottom row, you would sum up the “market value” and “annual income” like above. Then, do “annual income” divided by “market value” to get the portfolio yield.
