Want to make $1000 a month in passive income? I don’t blame you; I mean, who wouldn’t want to earn that. This article is about investing in dividend stocks to give you up to $1000 a month in passive income. What would you do with the money? Would you go on a vacation, say the Caribbean or on a cruise, or use it for a down payment on a new house or nice new sports car?
Whatever you can dream of, it is certainly possible – you just need a plan to get there. And that is why I have put together this article.
It is split into two parts.
The first part is a portfolio of quality dividend stocks that investors like you and me can buy and get $1000 a month in passive income. And the second part is the plan to get there.
What is a dividend share?
A dividend stock is a stock that pays out in cash, usually quarterly — or three times a year. If you look up a company that claims to have a 3% dividend yield, that means they pay 3% per annum, based on the current share price. So if you take a company whose stock price is $100, and they pay $3 per share every year, that means they pay a 3% dividend – based on the current stock price – per year.
How Much Do You Need to Make $1000 a Month in Dividends?
I’m going to tell you soon. To earn $1000 a month in dividends or passive income, you have invested about $250,000. And that may sound like A LOT, but I’m going to show you how you can do it too. It’s easy; almost anyone can do it. And even if you don’t have a lot of money to invest.
You may be wondering, “What do I know about dividends and making passive income.” Well, I’ve been living off my stocks since 2014. I trade technology stocks, dividend stocks and also sell covered calls and cash-secured puts. And that allowed me to move to Italy, travel the world and live the best life I could.
When it comes to dividend investing to generate passive income, you must be wondering, which dividend stocks should I choose? You want to choose stocks with a safe dividend, because if it cuts, then what? Right?
9 Dividend Stocks to Generate $1000/Month in Passive Income
The following shares are dividend shares; moreover, they are dividend kings. I chose this one for a few reasons, mainly because they are giant companies that have been paying dividends for over 50 years. In fact, many have paid dividends for more than 60 consecutive years. The companies are all making billions of dollars, and there is little doubt that they will be around for many years to come. And when it comes to choosing stocks, it is always best to pick quality stocks with the characteristics.
First on the list is Coca-Cola, the largest non-alcoholic beverage company in the world. The company is loved by millions of people around the world. Even Warren Buffett’s position in Coca-Cola is up more than 1800%. But since people in markets like the US drink less soda, that’s a problem. Coca-Cola is therefore investing in other areas, such as juice and tea.
Coca-Cola’s fast-growing categories are promising. The company has increased its dividend every year, as it has for 59 years in a row. Is it like getting 59 years of pay rise?
Then we have 3M, a company that makes a lot of products. In fact, at last count, it’s over 60,000 products across multiple business segments. And they are used every day in homes, hospitals, office buildings and schools around the world. Even Post-it notes are a 3M product!
The company has been increasing its dividends for over 63 years, making it a quality company for any investor’s portfolio.
American States Water Co.
Do you drink water? I mean, who wouldn’t, right? So why not invest in it?
Water is arguably the most recession-proof industry in the entire economy. I mean, water is a basic necessity of life, which means that there is a constant demand from year to year. So even in the worst economic recession everyone would still need water.
And this is where American States Water comes in. You have probably never heard of this company. Still, they are a water company and in some states they also sell electricity.
And since our need for water isn’t going away anytime soon, this is a perfect company for any portfolio of dividend investors. They’ve been increasing their dividends for 67 years, AND they’re aiming for a 7% annual dividend increase. What does that mean if a company increases its dividend? Investors like you and me get a 7% raise just for holding the stock.
Colgate Palmolive Co.
Have you brushed your teeth lately? Then you may have used Colgate-Palmolive products! The company is a consumer goods company that sells many well-known brands, including Colgate, Palmolive, Tom’s of Maine, Ajax and Hill’s.
Colgate has a unique advantage: millions in emerging markets use its products. For example, in 2020 alone, Colgate-Palmolive generated a whopping 44% of its revenues from markets such as Latin America and Asia-Pacific.
This could make Colgate-Palmolive one of the top Dividend Kings on the list. Meanwhile, the company rewards shareholders with rock-solid dividends. They have paid continuous dividends since 1895, and Colgate-Palmolive has also increased the dividend for 58 years in a row.
Cincinnati Financial Corp.
Cincinnati Financial is an insurance company founded in 1950. The company sells home and auto insurance, business insurance and financial products, including life insurance, annuity insurance, property and casualty insurance.
As an insurance company, Cincinnati Financial makes money in two ways. It earns income from premiums on policies taken out and from investing the money it doesn’t currently need.
Cincinnati Financial has increased its dividend for 61 consecutive years. Imagine getting a pay rise for 61 years in a row?
Procter & Gamble Co.
Procter & Gamble is a consumer products giant. The company generates BILLIONS of dollars each year by selling brands including Pampers, Tide, Bounty, Charmin, Gillette, Crest and more.
As a result, Proctor and Gamble is up more than 73% in the past 5 years. Not only that, they’ve paid dividends for 131 years and increased for the past 65 consecutive years. I don’t know about you, but P&G could be your little passive income machine!
Dover Corporation is a diversified global industrial manufacturer of engineering systems, fuel solutions, pumps and process solutions, imaging and identification, and refrigeration and food equipment. But what does that mean?
Now I have to admit I had to look it up. But I soon discovered that Dover makes gas pumps and pos. Terminals, among many, many other things.
You know, it’s these kinds of companies that keep the economy going. And, unbelievably, nobody knows them. Yet this company continued to sell billions and has increased its dividend for 66 years in a row. These dividend companies will bring you up to $1000/month or more in passive income!
Johnson & Johnson
Johnson & Johnson is the largest US healthcare company with a market capitalization of more than $400 billion and more than $80 billion in annual revenue. Johnson & Johnson has a diversified business model for pharmaceuticals, medical devices and consumer health products. And the company has 28 separate platforms or products, each generating more than $1 billion in annual revenue.
Johnson & Johnson is up more than 42% in the last 5 years and they have increased their dividend for almost 60 years.
Emerson Electric Co.
Last but not least, we have Emerson Electric, a global leader in automation, commercial and residential solutions. The company is active in more than 150 countries.
Emerson is also up more than 62% in the past five years and has increased its dividend for more than 64 years.
Do you see the trend here? Quality companies, dividend hikes, this is what investors need to earn their first $1000 a month or more in passive income.
The $1000/month Passive Income Plan
Now you have an idea of what types of quality dividend companies you should invest in to generate passive income. However, I bet you are probably wondering in the back of your mind how on earth am I going to get an investment portfolio of $250k or more. Well, it’s easier than you think – but requires a 3-step plan.
I bet you think $1000/month will be hard to achieve. But thanks to compounding, that doesn’t have to be the case. Start thinking small. Instead of obsessing over $1000/month, start with $1 a month, then $100 a month, $250 a month, etc. Remember the old infomercial that used the term “set it up and forget it” thought? Well, it’s the same idea here.
Have you ever heard the question: what would you rather have? A million dollars now, or a cent that doubles every day for a month? So many people would take the million. But a cent that doubles every day for 30 days is worth $5,368,709.12 on the 30th day.
Well, the same is true with dividend investing. After you buy your first dividend share, you must first register for a DRIP. A DRIP is a dividend reinvestment plan that some companies offer to investors. It automatically reinvests the dividends in additional shares instead of receiving the money. So instead of getting money, you get stock and pay no commission for it.
And why would you want that?
You get something called dollar cost averaging, which means you get more stock when the markets fall. And all things being equal, that means more money in the bank every month.
When companies increase their dividends, like the companies above, you get more money every quarter. And with a DRIP you automatically buy more shares with the dividends.
Imagine it is a snowy day and you are standing on top of a hill. And you decide to roll a snowball. And as you push him forward, he gets bigger and bigger as he goes down the hill. And if you keep rolling that snowball, it’s going to get huge.
When you own a dividend stock, the snowball represents the dividends. And since your dividends are automatically reinvested, you get more shares each quarter, which means reinvesting more dividends each quarter, and so on.
It’s like an endless cycle. The cycle ends when you have enough passive income to live off it.
The last thing you need to do to get that $1000/month or more in passive income is buy more dividend stocks. Most of us have somewhere around $50-$300 a month to invest. And that’s fine! You want to start buying stocks as soon as possible and continue to do so. Before you know it you are well on your way to your goal.
This post Here’s how to earn $1000/month in passive income with dividend stocks
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