Passive income is money that requires little to no effort to generate once the initial work has been done.
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Having a steady passive income allows you to cover your basic expenses, save for the future, and have more freedom over how you spend your time. While generating thousands of dollars in passive income per month may sound out of reach, it is possible with the right strategy and effort.
Dividend stocks pay shareholders a portion of the company’s earnings on a regular basis. The payments are considered passive income since you can collect the dividends whether you trade the stock actively or not.
- To generate $5,000 per month in dividends, you would need a portfolio value of approximately $1 million invested in stocks with an average dividend yield of 5%.
- For example, Johnson & Johnson stock currently yields 2.7% annually. $1 million invested would generate about $27,000 per year or $2,250 per month.
- Top dividend stocks like Apple, Microsoft and JPMorgan Chase pay 2–3% yields. Combining stocks with higher and lower yields can produce an average dividend income of 5% on a stock portfolio.
