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How to Make $1000 Per Month with Stock Dividends

Now I know that many of you (myself included) is not quite in the position to make $1000 per month using stock dividends since the amount of capital required can be quite substantial.  However, it is still important to read and digest this information, tucking it away for future reference.  There may very well come a day when you need this knowledge such as during retirement when you are trying to balance risk with the possibility of outliving your money.

Before we actually get into the “how” portion of the article, let’s figure out how much capital we are talking about.  Making $1000 per month with dividends means that we are making $12,000 per year.  Assuming a 4% dividend rate, we would need $300,000 in dividend paying stocks to generate that kind of income.  But don’t say there is no way I would ever have that much.  A couple saving $10,000 for 30 years under a mattress should have that much.  If you are contributing the maximum to a 401(k), then you are able to put away $17,000 for 2012.  You don’t even have to maximally fund a 401(k) for 30 years and you can amass a decent stock portfolio.

So how are you going to turn those stocks into livable income?  With dividends, of course!

Getting a Monthly Income

Now there are some stocks which pay a monthly dividend.  Many of them are closed-end trusts that invest in energy or real estate.  However, there is one stock with which I am familiar that pays monthly, and that is Goldcorp (GG).  It is a Canadian gold mining company.  I owned it in my retirement account for a while before I decided to go with a different company.

But there is a way to get monthly dividend checks with companies that pay quarterly if you spread out your investments among several different companies paying at separate times.  For example, Pepsico (PEP) pays a dividend in January, March, June, and September and yields just over 3%.  Intel (INTC) pays in March, June, September, and December and yields just over 3% as well.  Coca-cola pays in April, July, October, and December.

In fact, I had managed to put together a sample portfolio consisting of five companies which could cover every month of the year.  Some months got extra dividends because some companies don’t pay at precisely 3 month intervals.  I suspect it has to do with the end of the fiscal year.  Those five companies were Walmart, Coca-cola, Microsoft, JP Morgan Chase, and Verizon.  You can play around with your own combination to see what you can come up with.

It takes some work but is possible to divide your funds among different companies that will pay out in different months.  With just Pepsi and Coke, you can receive checks in 8 of the 12 months of the year.

Of course, it would be easier to simply pick the dividend stocks in which you wish to invest, take the funds whenever they occur during the quarter, and budget out your $1000 monthly yourself.

As mentioned, the one downside to this method of income is that it takes a substantial amount of money to invest.  Rather than spending a lot of time working to develop and establish the income, it takes cash.  So if you have the cash to do this, great.  If not, there are plenty of other ideas on the site which can help you make an extra $1000 per month which would eventually give you the cash needed to move to a more passive form of generating monthly income.

Be sure to check out the rest of the site and subscribe to the RSS feed as each Monday Grand Per Month will bring you another money making idea.

 

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15 comments to How to Make $1000 Per Month with Stock Dividends

  • Yeah, as my IRA currently stands, a stock would have to pay 125% dividend to make a grand! But that is definitely the point that I am trying to grow towards.

  • Stock & Bond dividends are how I’ve primarily been driving passive income so far. I agree, it takes a long time to get substantial income. What I’ve also discovered is the time required to manage and research individual stocks can also reduce the passiveness. I’ve been focusing on dividend etf’s that manage the diversification for me. So far so good. Just started my path on passive income through blogging. Enjoying generating content!
    BE @ BusyExecutiveMoneyBlog.com recently posted..Looking at your total financial picture…What does it tell you?My Profile

    • admin

      Yes, there can be a fair amount of research involved but I spend little time on research since I am using puts and calls to minimize risk.

      • YFS

        When calculating the monthly dividend income are you factoring in expenses or are your referring to gross income? Also, are all the companies you discussed paying qualified dividends?
        YFS recently posted..5 Finacial Tips I Learned From Watching MTV’s The Jersey ShoreMy Profile

        • admin

          I would have to assume that they are qualified dividends being major US corporations. I am figuring gross income which is essentially the same as net income because as a shareholder, there shouldn’t be any expenses associated with dividends. You will have to pay taxes, but you would with many other income sources as well.

  • One of my long term goals is to earn $1,000 per month in dividend income. You are right on about how much capital it takes to reach that amount, but I am slowly working towards this goal.

    One thing I found helpful is to track a 3-month rolling average so I can see my progress month to month. My 3-month average rose to $23.48 in January. Not great, but a start. I want to hit $50 average by 2013 and then set another short term goal. Baby steps!!!
    John recently posted..How to Calculate the Graham Number of a StockMy Profile

    • admin

      I like the 3-month rolling average idea. I have been looking at quarterly income for stock dividends so I guess the net effect is similar. Doubling your dividend income in a year is a good goal.

  • One of the nice things about dividends is that if you pick companies that have a record of increasing dividends year over year (like the dividend aristocrats) your yield on your original investment increases as well! You may start with a 4% yield this year and through dividend increases end up with a 6% yield a few years down the track.
    CentsableOne recently posted..January Progress Report – Building a Location Independent IncomeMy Profile

  • Since I am employee with Chase, I have been taking advantage of their DRIP program.

    It has consistently been making a little over 6% in dividend returns over the past couple years.

    I love Adsense and Affiliate marketing for the fast money, but I am even more a fan of dividend investing as “true” passive income. Hopefully I will have more money to invest soon!
    Quinton Hamp recently posted..January Income UpdateMy Profile

  • Stock dividends are close to Forex trading. I know that Forex is too risky. But if you know the basics and use reliable Forex expert advisors, you can gain up to 10% of your investment each and every month.
    Alexander @ PipBurner recently posted..Typical Technical Analysis Using Multiple Time FramesMy Profile

  • Yeah, keep building those websites – they can deliver a much higher return than investing in stocks and waiting for those dividends.
    Brett recently posted..Watch Me Buy a Website Business and Make a Decent Second Income!My Profile

    • admin

      True, the return can be better. There is some work involved. I also worry about the longer term viability of websites, but that can be said of any business. I will be working on both and diversifying.