Dividend investing is a proven strategy to generate extra, but steady, income streams. It requires minimal or little effort to produce “true” passive income through investing. The keys to success are time and money. If you have both, you can easily earn income through your investments. Many retirees make a living through dividends.
For Canadians, dividend earnings can be part of one’s overall retirement plan, complementing payouts from the Canada Pension Plan (OAS) and Old Age Security (OAS).
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Investment option
You don’t need a lot of money to start dividend investing. Some TSX stocks trade for less than $10 per share but pay outsized dividends. Earning $2,100 every year without lifting a finger is possible if you invest in a smart stock.
I will use Fiera Capital (TSX: FSZ) as an example. The $947 million investment management firm provides customized multi-asset solutions (traditional and alternative asset classes) to institutional, retail and private wealth clients in North America, Europe and select Asian markets.
The stock is enticing for its affordability and lucrative quarterly payouts. At $8.84 per share, the dividend yield is an over-the-top 9.6%. FSZ has outperformed the TSX year-to-date, up 57.6% compared with the index’s return of 16%.
Thriving business
Montreal-based Fiera Capital caters to clients in the public and private sectors, offering various investment strategies across asset classes, styles, and capitalization ranges. The primary goal is to help clients achieve long-term, sustainable growth and get the best return through its active management model.
The business is doing well amid a challenging economic environment, evidenced by the financial results in the first half of 2024. In the six months ended June 30, 2024, total revenues and net earnings increased 5% and 46.3% year-over-year to $332.9 million and $16.3 million. At the end of Q2 2024, the asset under management (AUM) is $158.9 billion.
Management established a comprehensive global cybersecurity program to make Fiera Capital’s risk management more robust. The program also bolsters security and data protection. An encouraging heading to the second half of 2024 is that its balanced investment strategies, medium and long-term, continue to outperform.
How much you earn in dividends by investing in Fiera Capital
Let’s assume the share price and dividend yield remain constant. If you invest $12,000 in Fiera, it would take about 6.25 years to earn $2,100 in yearly passive income, thanks to the powers of compounding and dividend reinvesting.
Here’s how it breaks down. ($12,000 / $8.84 = 1,357 shares)
| Company | Recent Price | Shares | Dividend | Payout over 1 year |
| Fiera Capital | $8.84 | 1,357 | $0.86 | $1,167 |
You’d end up with $1,167 in dividend income at the end of one year.
If you don’t pocket the dividends and instead reinvest them quarterly, your money would compound to $21,883.94 over 6.25 years. The new balance (money invested plus profit from dividends) would start generating $2,129.31 in dividends every year.
