Want to earn a steady stream of income just by owning stocks? Dividend-paying stocks can be a popular way to do that! Scotiabank, officially known as The Bank of Nova Scotia (TSX:BNS), has been a long-time favourite for Canadian investors who like those regular dividend payouts. If your goal is to make $5,000 each year just from Scotiabank dividends, let’s figure out how many shares you’d need and what kind of investments you could invest in.
How much would it take?
As of writing, Scotiabank stock trades at $64.75 per share. The bank hands out an annual dividend of $4.24 per share. So, for every share you own, you get $4.24 back in dividends each year. This works out to a dividend yield of about 6.4% at writing. That means for every $100 you invest, you’d get about $6.36 back in dividends annually, if the dividend stays the same.
So how many shares do you need to snag that $5,000 in annual dividends? Here’s the simple math.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
| BNS | $64.72 | 1,180 | $4.24 | $5,003.20 | quarterly | $76,369.60 |
So, to buy around 1,180 shares of Scotiabank at today’s price, you’d be looking at an investment of roughly $76,369.60. That’s a pretty significant amount of money to put into one single stock.
Is it worth the investment?
It’s important to keep in mind that stock prices can wiggle up and down over time, and dividend yields can change too. Scotiabank has a good track record of keeping its dividend steady and even increasing it occasionally. For example, they’ve been consistently paying that $1.06 per share every quarter for a while now. That kind of consistency can be reassuring for dividend investors.
When you’re thinking about making an investment like this, it’s really important to consider your own financial goals, how much risk you’re comfortable with, and how diverse your overall investment portfolio is. While Scotiabank is a big and established bank with a solid history, putting a large chunk of your money into just one stock always carries some level of risk. Spreading your investments across different industries and different types of assets can help protect you if one particular investment doesn’t do as well as you hoped.
Also, remember that dividends aren’t guaranteed. Companies can decide to change or even stop paying dividends if their financial situation changes or if the market takes a downturn. However, Scotiabank’s long history of consistent dividend payments does give some comfort that they’re committed to giving value back to their shareholders. It’s one of the reasons why it‘s often considered a reliable dividend stock.
Foolish takeaway
If the idea of investing over $75,000 in one stock feels like a bit much, there are other ways to get into dividend investing. For example, you could look at Exchange-Traded Funds (ETFs) that focus on dividend-paying stocks. These ETFs hold a basket of different dividend stocks, which automatically gives you diversification and reduces the risk of relying on a single company’s dividend.
Altogether, to potentially earn $5,000 in dividends each year from Scotiabank at the current dividend rate, you’d need to invest around $76,369 to buy approximately 1,180 shares. While this could provide a nice steady income stream, it’s crucial to think about your overall investment strategy, make sure you’re not putting all your eggs in one basket by diversifying, and stay informed about what’s happening in the market. Talking to a financial advisor can also give you personalized advice that fits your specific financial situation and long-term goals. They can help you figure out the best way to build a dividend income stream that works for you!
