© Reuters. This Is How To Make $1000/mo In Passive Income With These Top 9 Dividend Stocks To Hold Forever
Do you 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 will cover investing in dividend stocks to get you 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 downpayment on a new home or a fancy new sports car?
Whatever you can dream about, it’s definitely possible – you just need a plan to get there. And that’s why I put this article together.
It’s split into two parts.
The first part is a portfolio of quality dividend stocks that investors like you and I can buy and get $1000 a month in passive income. And the second part is the plan to get there.
What is a dividend stock?
A dividend stock is a stock that pays cash, usually quarterly – or three times a year. If you look up a company that says it has a 3% dividend yield, then it means they pay 3% a year, based on the current stock price. So, if you take a company whose stock price is $100, and they pay $3 a share every year, then it means they pay a 3% dividend – based on today’s share price – per year.
How much do you need to make $1000 a month in dividends?
I’m going to break it to you quickly. To make $1000 a month in dividends or passive income, you will need about $250,000 invested. And that might sound like a LOT, but I’m going to show you how you can do it too. It’s easy; just about anyone can do it. And, even if you don’t have a lot of money to invest.
You might be wondering, “what do I know about dividends and making a passive income.” Well, I’ve been living off my stocks since 2014. I trade tech stocks, dividend stocks and also sell covered calls and cash secured puts. And doing so has allowed me to move to Italy, travel the world, and live the best life I possibly could.
When it comes to dividend investing to generate passive income, you have to ask yourself, which dividend stocks do I choose? You want to pick stocks with a safe dividend because if it gets cut, then what? Right?
9 Dividend Stocks To Generate $1000/mo In Passive Income
The following stocks are dividend stocks; moreover, they are dividend kings. I picked these for a few reasons, mainly because they are gigantic companies that have paid dividends for more than 50 years. In fact, many have paid dividends for more than 60 consecutive years. The companies all make billions of dollars, and there’s little doubt that they will be around for many years to come. And when it comes to picking stocks, it’s always best to choose quality stocks with the characteristics.
Coca Cola (NYSE: KO)
First on the list is Coca-Cola (NYSE:KO), the largest non-alcoholic beverage company globally. The company is loved by millions of people around the world. Even Warren Buffett’s position in Coca-Cola is up over 1800%. But as people drink less soda in markets like the U.S., it’s a problem. So, Coca-Cola is investing in other areas like juice and tea.
Coca-Cola’s higher-growth categories are promising. The company has increased its dividend each year, as it has done for 59 years in a row. Is it like getting a raise for 59 years?
3M (NYSE: NYSE:MMM)
Next, we have 3M, a company that manufactures many products. Actually, it’s over 60,000 products in multiple business segments at last count. And they get used every day in homes, hospitals, office buildings, and schools worldwide. Even Post-it notes are a 3M product!
The company has raised its dividends for more than 63 years, making it a quality company for any investor’s portfolio.
American States Water Co. (NYSE: AWR)
Do you drink water? I mean, who doesn’t, right? So, why not invest in it?
Water is arguably the most recession-resistant industry in the entire economy. I mean, water is a basic necessity of life, which means steady demand from year to year. So, even in the worst economic recession, everyone would still need water.
And here’s where American States Water comes in. You’ve probably never heard of this company. Still, they are a water utility, and they also sell electricity in some states.
And since our need for water isn’t going away anytime soon, this is a perfect company for any dividend investors portfolio. They’ve increased their dividends for 67 years, AND they target a 7% annual dividend increase. What does that mean when a company increases the dividend? Investors like you and I get a 7% raise just for holding the stock.
Colgate-Palmolive Co. (NYSE: NYSE:CL)
Have you brushed your teeth lately? If so, you may have used Colgate-Palmolive products! The company is a consumer staples company that sells many famous 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 revenue from markets like Latin America and Asia-Pacific.
Because of this, Colgate-Palmolive could be one of the best Dividend Kings on the list. In the meantime, the company reward shareholders with rock-solid dividends. They’ve paid uninterrupted dividends since 1895, and Colgate-Palmolive has also increased its dividend for 58 consecutive years.
Cincinnati Financial is an insurance company founded in 1950. The company sells home and auto insurance, business insurance, and financial products, including life insurance, annuities, property, and casualty insurance.
As an insurance company, Cincinnati Financial makes money in two ways. It earns income from premiums on policies written and by investing the money it doesn’t currently need.
Cincinnati Financial has raised its dividend for 61 consecutive years. Imagine getting raise for 61 years in a row?
Procter & Gamble Co. (NYSE: PG)
Procter & Gamble is a consumer products giant. The company generates BILLIONS of dollars every year by selling brands including Pampers, Tide, Bounty, Charmin, Gillette, Crest, and more.
As a result, Proctor and Gamble is up over 73% in the last 5 years. And not only that, they’ve paid a dividend for 131 years and increased it for the past 65 consecutive years. I don’t know about you, but P&G could be your little passive income ATM!
Dover Corp . (NYSE: DOV)
Dover Corporation (NYSE:DOV) is a diversified global industrial manufacturer of engineered systems, fueling solutions, pumps & process solutions, imaging & identification, and refrigeration & food equipment. But what does that mean?
Now, I have to admit, I had to look it up. But I quickly found that Dover makes gas pumps and pos. Terminals, among many, many other things.
You know, it’s companies like this that keep the economy going. And, incredibly, no one knows about them. Yet, this company continued to churn out billions in sales and has raised its dividend for 66 years in a row. These dividend companies will get you to $1000/mo or more in passive income!
Johnson & Johnson (NYSE: JNJ)
Johnson & Johnson is the largest U.S. healthcare company with a market cap of over $400 billion and over $80 billion in annual sales. Johnson & Johnson has a diversified business model across pharmaceuticals, medical devices, and consumer health products. And The company has 28 individual platforms or products that each generate over $1 billion in annual revenue.
Johnson & Johnson is up over 42% in the last 5 years, and they’ve increased their dividend for nearly 60 years.
Emerson Electric Co. (NYSE: NYSE:EMR)
Last – but not least, we have Emerson Electric, a global leader in Automation Solutions and Commercial & Residential Solutions. The company operates in more than 150 countries.
Emerson is also up over 62% in the past five years and has raised its dividend for more than 64 years.
Do you see the trend here? Quality companies, dividend increases, this is what investors need to earn their first $1000 a month or more in passive income.
The $1000/mo passive income plan
Now you have an idea of what types of quality dividend companies you’ll need to invest in to generate passive income. However, I bet that in the back of your mind, you’re probably wondering, 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’re thinking that $1000/mo will be hard to achieve. But, thanks to compounding, it doesn’t need to be. Start by thinking small. Instead of obsessing over $1000/mo, start with $1 a month, then $100 a month, $250 a month, etc. Remember the old infomercial that coined the term “set it and forget it”? Well, it’s the same idea here.
Have you ever heard the question – Which would you rather have? A Million dollars now, or a penny that doubles every day for a month? So many people would take the million. But, a penny that doubles every day for 30 days is worth $5,368,709.12 on the 30th day.
Well, with dividend investing, the same thing applies. After you buy your first dividend stock, the first thing you need to do is enroll in a DRIP. A DRIP is a dividend reinvestment plan that some companies offer to investors. It automatically reinvests the dividends into additional shares of stock rather than receiving the cash. So instead of getting money, you get stocks, and you don’t pay a commission for it.
And why would you want that?
You get something called dollar-cost averaging, which means you’ll get more stocks when the markets go down. And, all things being equal, it means more money in the bank every month.
Then, when companies increase their dividends, like the companies above, you get more money each quarter. And with a DRIP, you automatically buy more shares with the dividends.
Imagine it’s a snowy day, and you’re at the top of a hill. And you decide to roll a snowball. And as you’re pushing it forward, it gets bigger and bigger as it goes down the hill. And, if you keep rolling that snowball, it becomes gigantic.
When you own a dividend stock, the snowball represents the dividends. And, as your dividends get automatically reinvested, you get more stocks each quarter, which means more dividends each quarter to reinvest, and so on.
It’s like a never-ending cycle. The cycle ends when you have enough passive income to start living off it.
The last thing you’ll need to do to get to that $1000/mo or more in passive income is to 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 you can and continue to do so. Before you know it, you’ll be well on your way to your goal.
This article originally appeared on RickOrford.com and was republished with permission.
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