How Much to Invest to Get $500 in Dividends Every Month

For Canadian investors, passive income can be a game-changer, especially when you think long term. By investing in assets like dividend stocks or real estate investment trusts (REIT), you can build a steady income stream that grows over time. A study by Vanguard found that over a 30-year period, dividend-paying stocks have delivered average returns of 9.7% annually. This approach doesn’t just offer consistent payouts. It also provides the potential for capital appreciation, thereby making it a lucrative strategy for those who are patient and committed to long-term investing. So, how can investors get started?

Get it going

Starting to save up a large amount of income for passive income investments doesn’t have to be complicated. The first step is creating a budget and sticking to it, ensuring that a portion of your income is automatically directed toward savings. Many Canadians find success with automated contributions to investment accounts. This ensures that saving becomes a consistent habit. You can set up automatic transfers through most banks, making it a “set it and forget it” system that builds wealth in the background.

The snowball method is another great way to ramp up your savings. By focusing on paying off small debts first, you free up more income to save and invest. As your investments grow, the snowball effect takes over. Your passive income increases, and you can reinvest those earnings to generate even more over time. This approach accelerates your journey to financial independence, allowing you to eventually live off your investment returns.

Where to invest

When considering the best investments for long-term passive income, dividend stocks and REITs should be at the top of the list. Stocks that consistently pay dividends, like those in the banking or utility sectors, provide reliable payouts and have a track record of weathering market downturns. REITs, which pool money to invest in real estate properties, are another strong option. These tend to offer higher yields than traditional stocks.

Another key investment to consider is exchange-traded funds (ETFs) that focus on dividend-paying stocks. These funds diversify your portfolio and reduce risk, while still giving you access to companies that pay out dividends regularly. By selecting ETFs that focus on high-yield dividends or even a combination of growth and income stocks, you set yourself up for consistent returns and a robust portfolio in the long run.

One stock to consider

Slate Grocery REIT (TSX:SGR.UN) on the TSX is a standout choice for passive income investors looking for stability. With a market cap of $755.7 million and a forward price/earnings (P/E) ratio of just 6.9, it’s attractively valued. Despite its stock price only increasing by 1.03% over the past year, its forward annual dividend yield of 8.5% at writing offers a compelling reason to hold. Slate Grocery REIT has maintained a five-year average dividend yield of 9.3%, highlighting its commitment to returning value to shareholders through consistent income.

While its earnings growth has dipped recently, Slate Grocery REIT still offers strong fundamentals, especially with an operating margin of 75.7% and a steady flow of operating cash. As one analyst noted, “Slate Grocery REIT continues to offer stable and secure dividends, even amid market fluctuations.” This makes it a safe choice for those looking for dependable, long-term passive income. So, how much do you need to invest to get that $500 per month, or $6,000 annually?

Bottom line

Now this is a large investment, but remember: in that time you’ll be earning returns as well! In a nutshell, building long-term passive income is all about saving smart, investing in dividend stocks and REITs, and letting time do the heavy lifting. Whether you’re starting small with automated contributions or diving into a solid pick like Slate Grocery REIT, the key is consistency and patience. Before you know it, you’ll be watching your income snowball into something truly rewarding!