Last year, I wrote an article in which I outlined my strategy to achieve $5,000 worth of passive income in 2025.
Not even three months into the year, I’m happy to say that I’ve achieved my goal:
According to my brokerage(s), I’m due to receive $5,675 in dividend and interest income in 2025. Now, technically this sum has not yet been received – when I say $5,675 in passive income, I mean “projected income.” Nevertheless, with my portfolio being comprised of mostly stable blue chips and guaranteed investment certificates (GICs), the $5,675 appears likely to come in by the end of the year. In this article, I explore how I got to $5,675 in projected passive income way ahead of schedule.
What the $5,675 consists of
The sources of my $5,675 in projected passive income are:
- A $74,000 GIC portfolio that will pay out $2,564 when the GICs mature later this year.
- A stock portfolio paying $3,111 in annual dividends.
All of these securities are stashed comfortably within registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs). So, I don’t even pay any taxes on the income.
How I got there
My approach to building RRSP and TFSA passive income was pretty simple:
Accumulate GICs and stocks over the long term. The GICs are mainly there for use as a downpayment on a house at some point in the future. I hold them across my RRSP and an FHSA (you can withdraw money from an RRSP without a tax penalty if you use it to buy your first home). As for the dividend stocks: I simply accumulated the positions over a period of years.
One stock that plays a big role in my 2025 passive income receipts is the Toronto-Dominion Bank (TSX:TD). It’s a Canadian bank stock that got beaten down badly last year due to a fine and asset cap it received from US regulators. The fine was indeed a setback last year, but the asset cap has empowered TD to free up money to pay dividends and do a large $8 billion buyback.
At the time of this writing, I owned 138 TD Bank shares worth approximately $11,730. The shares pay me approximately $579.60 per year in dividends. Here’s how the math on that works:
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| TD Bank | $85 | 138 | $1.05 per quarter ($4.20 per year) | $144.90 per quarter ($579.60 per year) | Quarterly |
As you can see, the $579.60 income stream above can be bought with just over $10,000. So getting that much passive income is very do-able.
Foolish takeaway
When I started writing this article, I was surprised to see that I had not only hit but exceeded my $5,000 passive income goal so soon after setting it. I honestly thought it would take me until the end of the year to hit $5,000 in projected dividend and interest income. The fact that I hit the goal so early on just goes to show that anything is possible with investing. Really, the sky is the limit.
