Looking for passive income? Here's the way I earn $1,701/Year


Various Canadian dollars in gray pants pocket

In a recent series of articles, I’ve explored my plan to get to $2,000 per year in passive income by the end of 2023. When I started the series, my brokers reported that I had $1,200 per year in tax-free passive income. Today, I’m at $1,701. By adding a few new investments as well as selling some old ones that didn’t pay dividends and re-investing the proceeds into dividend stocks, I’ve increased my annual passive income by $500/year. In this article, I will explain how I did it.

Dividend stocks

The main thing I’ve done in the last two months to increase my annual passive income was to invest in dividend stocks — notably, Toronto-Dominion Bank (TSX:TD) and Bank of America (NYSE:BAC). These are two bank stocks that I hold in my Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Account (TFSA).

TD Bank stock yields about 4%. Bank of America yields 2.5%. Currently, I own 137 shares of TD Bank and 260 shares of Bank of America, resulting in $830.2 in annual dividend income from these two stocks. Below is a series of tables showing how the math on that works out.

Table #1: TD and Bank of America dividends

TD dividend per share (annual)$3.84Bank of America dividend per share (annual)$1.17 (converted from US$0.88)Number of TD shares I own137 ($526 in dividends per year)Number of BAC shares I own260 ($304 in dividends per year)

Table #2: The math

Quarter 1Quarter 2Quarter 3Quarter 4Full yearTD Bank dividends $131.5$131.5$131.5$131.5$526Bank of America dividends$76.05$76.05$76.05$76.05$304.2Combined$207.55$207.55$207.55$207.55$830.2

So, that’s $830.2 per year in dividends just from TD and Bank of America. Plus, I own a variety of smaller dividend positions (both stocks and funds) that take the dividend income to $1,200. If you’re wondering how I got the total up to $1,700, read on, because in the next section, I’ll show where my passive income is coming from, apart from dividends.

Guaranteed Investment Certificates (GICs)

Apart from dividends, I also get some passive income from GICs. These are fixed-income investments that you buy from banks. Historically, they haven’t yielded much, but this year, you can find GICs yielding up to 5%. I currently have two 5% yielding GICs in my portfolioone from EQB and one from Bank of Nova Scotia. Together, they add about $500 in projected annual income to my portfolio.

Foolish takeaway

So, there you have it. The way I got to $1,700 in annual passive income was by diligently investing in dividend stocks, funds, and GICs. It took me several years of saving to get this amount, but I got there.

The big takeaway here is that passive income is obtainable, but you’ll have to save a fair amount of money to get it. The portfolios that are paying me $1,700 per year are worth about $92,000 combined, so you’ll need to invest a fair amount of money to get a lot of dividend income coming in. Over a period of several years, it’s very doable. Just don’t expect a miracle overnight.

The post Need Passive Income? Here’s How I’m Getting $1,701/Year appeared first on The Motley Fool Canada.

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More reading

3 Canadian Bank Stocks for Tax-Free TFSA Income Could TD Stock Pick Up the Pace in 2023? 3 Undervalued Canadian Stocks Worth a Buy Right Now Better Buy for Passive Income: TD Stock or Enbridge? Better RRSP Buy: Fortis Stock or TD Bank?

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Fool contributor Andrew Button has positions in Toronto-Dominion Bank. The Motley Fool recommends Bank Of Nova Scotia, Bank of America, and EQB. The Motley Fool has a disclosure policy.

https://www.fool.ca/2023/02/25/need-passive-income-heres-how-im-getting-1701-year/

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