Home » Investing » TFSA Investors: Bring in $275 per Month From This Dividend Stock
Now is the perfect time to pick up dividend stocks, with a market crash on the way you could bring in a yield any investor would envy!
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Amy Legate-Wolfe
Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances.
Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities.
Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. Amy’s work can be found regularly on the Financial Post and MoneyWise Canada.
When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog Finley, and travel.
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Latest posts by Amy Legate-Wolfe (see all)
- 3 Stocks That Could Make You Richer in 2024 - March 10, 2024
- 1 Canadian Dividend Stock Quietly Crushing the TSX Today - March 8, 2024
- If You’d Invested $1,000 in Fortis Stock in 2014, This Is How Much You Would Have Today - March 8, 2024
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| More on: TUT
We could all use some extra cash right about now. The stock market may have recovered, but another market crash could certainly be on the way. That means finding stable dividend stocks during this volatile period is practically essential.
Lockdowns continue to happen across the country, and the world. This means businesses are likely to see another downturn similar to the beginning of the pandemic. Investors should be on guard for another market crash and looking for stable income. There are a number of dividend stocks out there, but not all are created equal. So if you want to bring in $400 per month, it’s going to take two things. First, a stock that will continue payouts. Second, a fairly large investment.
Consider Telus
There are a number of telecommunications companies out there, butTELUS Corp. (TSX:T)(NYSE:TU) has been at the top lately. That comes down to the company getting ahead of the 5G curve and installing wireline. Now, the company can look forward to bringing in revenue rather than dreading the huge investment.
It’s certainly been working. Many people reconsidered negotiating contracts during the work-from-home economy change. Telus managed to see revenue grow steadily even during the peaks of the pandemic. Most recently revenue rose 4.21% year over year.
Meanwhile, its share price is back at pre-crash levels. But during the last decade, it’s come up about 250%, for a compound annual growth rate (CAGR) of 25% during that time. And, of course, it offers a strong dividend of 4.69% as of writing.
Bring in that cash!
So if you want to bring in monthly income, it will take a fairly significant investment. Let’s say you were to use $70,000 of your Tax-Free Savings Account (TFSA) contribution room. That would bring in $3,297 in annual dividend income from this dividend stock as of writing. That would then equal $274.76 in monthly dividend income!
But let’s take this a step further. The company has continued to grow dividends each year over the last several years, by 8.19% in the last five years alone. So let’s say you were to take that cash and reinvest it until you really needed it. Now you can take that money and put it toward Telus again and again.
Why do this? You now have free cash to put towards the stock and grow an even bigger portfolio. Using the information above, you can figure out where Telus might be in another decade! In this example, we’ll assume it will continue to see share growth of 25%, and dividend growth of 8.19%. That means in another decade your $70,000 investment could be worth $819,441.71. That’s almost a million dollars in a decade!
Foolish takeaway
Yes, we could all use the cash that comes from monthly dividend stocks. But if you don’t need it right away, consider reinvesting that money. It certainly won’t hurt, and could make you a millionaire if you invest properly! The best part is you don’t have to invest in risky stocks. Instead, choose strong companies that will continue to be around paying those dividends for decades to come.
