How many shares of stock do you need to buy for $1,000 monthly income?
How many shares of these stocks would you need to make $1,000 a month income? How do you create cash flow from your investments you can live off each month? We all want to live off dividends but is it even possible and how much money do you need?
In this video, I’m digging into the numbers to reveal how much you need to invest to make $1,000 every month in dividends. We’re going to look at this from different ways and then I’m going to reveal a secret to stock investing most investors don’t think of.
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How to Invest for Monthly Cash Flow
Those of you in the community know, we’re all about dividend investing here on Let’s Talk Money. I love talkin’ other types of investing and making money but there’s just something about that passive income cash flow you get from dividends that’s tough to beat.
In nearly a decade
as an equity analyst, I’ve learned there are few things better than a reliable
stream of dividends.
But how do you turn a handful of dividend stocks into that cash flow? How do you get to a point you can live off those dividends. How many shares of some of the most popular dividend stocks do you need to make that dream a reality?
That question is
straight from the comments to one of our videos here on the channel.
So in this video,
we’re going to answer that for seven of the most popular stocks out there.
We’ll first look at how many shares and then how much you need to invest in
each to reach that thousand-dollar monthly payday.
Finally, I’m going to reveal a truth about dividend investing that most people don’t think about when they’re going after these stocks. I’ll show you exactly how many shares to buy, how much to invest for $1,000 a month and the best investments for monthly income.
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What are the Best Investments for Monthly Income?
For the video, I
picked six of the most widely-held dividend stocks and a fund with one of the
highest yields you’ll find. We’ll look at the dividend yield on each and then
I’ll show you how many shares of stock you need in each and the dollar amount
to secure that $1,000 monthly income.
Now, I like all these dividend stocks and hold them in my portfolio but I’m mostly just using them as examples for investments to buy for monthly income. I’ll highlight a few non-stock income investments you should try as well.
Understand though, these aren’t necessarily the best dividend stocks to live off your dividends or to make that $1,000 a month. None of the dividend yields on these stocks are very high so you’re going to need to invest more to make that money. Compare that with some of the highest paying dividend stocks I’ve shared in videos and the best strategy will be a mix of these large, stable companies plus some money invested in higher-yielding dividend stocks to boost how much you make each month.
We just posted an analysis of Apple shares on the channel last month with about a $220 price target on top of its 1.5% dividend yield. Apple has a new lineup of iPhones coming out this year and is really building its base for services.
Ford is another stock we’ve recently analyzed and added to our seven-stock passive income portfolio. The shares dropped hard on last quarter’s earnings but that six-and-a-quarter percent dividend is secure and the long-term upside is positive.
Of all the dividend
names, I think AT&T is the one I hear most about from you in the community.
The company’s made some major acquisitions over the past year so it’s in that
growth stage and the 6% dividend is hard to beat.
Realty Income is a solid player in the real estate space and pays a 3.9% dividend yield. Now this one actually pays a monthly dividend rather than every three months like the rest of the stocks in our list. That means you don’t have to time your dividends or save some of that quarterly check, you can just collect it every month.
I just did an analysis of Netflix so I looked into Disney as a competitor and gotta tell you, I really like the growth potential on this one. It’s not a strong dividend name with just a 1.2% yield but we’re going to see in a little bit that the total return has been one of the strongest.
3M is another
popular dividend stock I get a lot of requests for and a solid 3.3% yield. 3M
is diversified across almost every part of the industrial process so it’s a
stable stock that really follows the economy. This company though has one of
the best research and development departments I’ve seen and that allows it to
get a little extra return on what you’d expect above baseline economic growth.
Our seventh stock isn’t a stock at all but a fund, the Alerian MLP fund, and those of you in the community will recognize this from our dividend stock portfolio. The fund is an excellent group of pipeline companies in the US energy space, so really primed for that energy independence, and pays a high 8% dividend yield.
Of course, stocks aren’t the only investments that provide monthly income or can help you build to that $1,000 a month. Besides helping to grow your income, the investments below will diversify the risk in your portfolio so the next stock market crash doesn’t wipe you out!
High-yield bonds produce dividends as high as 6% to 8% and with less risk than stocksTax lien investing is my favorite passive income investment and can produce up to 20% a year in incomeRental properties regularly spin-off 8%-10% in cash rents a year
How Many Shares to Buy to Make $1,000 a Month?
Now let’s look at how many shares you need in each to generate that monthly cash goal but first, I want to send this out to you for a feedback question. Which dividend stocks did I miss, which ones do you want to see highlighted in videos. Click through the video above in YouTube and let me know in the comments!
The chart here shows exactly how many shares of stock to buy to make $1,000 a month for each company. We find this by taking that $1,000 times 12 and then dividing that by the quarterly dividend payment from each company times four. Don’t worry, the math actually isn’t too bad once you do it once or twice.
Number of shares to buy to make $1,000 per month = $12,000 divided by (dividend per share times 4)
For example, shares of Ford currently pay a dividend of $0.10 per share every three months or $0.40 per year. If we need to make $1,000 a month or twelve grand a year then divided by $0.40 would mean we need to buy 30,000 shares. The numbers in the graph are slightly off because I’m updating this post with current dividend payments.
So if you look at
the dividends per share for each of these companies and that $1,000 monthly
goal, you get the number of shares of stock in each you’d need to buy. And we
see some hugely varying numbers here, right?
At the top end,
you’d need almost 20,000 shares of Ford at that $9.30 each to produce the
thousand a month. That’s at a solid 6% dividend yield but just a $0.60 per
share annual payout.
You’d need over
15,000 shares of the Alerian fund or 5,800 shares of AT&T stock. On the
lower end, you’d need 2,100 shares of 3M at that $177 price and the $5.76 per
share in annual dividends.
How Much to Invest for Dividends
But what if we look
at it from another perspective. How much do you need to invest in each stock to
reach that thousand-dollar monthly goal? After all, you receive that dividend
yield on the amount you have invested so it would make sense to look at it this
And here we see a
completely different story with some of those high-yield stocks on the bottom.
We need just over $150,000 in the Alerian MLP fund with its 8% dividend yield.
Just $200,000 in shares of AT&T and its 6% yield are enough for a thousand
in income each month.
On the other hand,
you’d need $810,000 in Apple or almost a million dollars in shares of Disney
with their sub-1.5% yield.
But the truth is,
neither of these perspectives is the right one.
Trying to get that thousand-dollar income from Apple looks nearly impossible, needing $810,000 invested in the stock. Even some of those high-yield stocks like AT&T, you’d need over $200,000 invested.
In fact, I’ve gotten more than a few nasty comments on the video about needing that much money to produce a monthly income. People are offended that, contrary to all the false promises they’ve been sold on getting rich quick, investing for $1,000 month income isn’t as simple as just putting a few hundred into an online account.
But you can’t just
look at dividend yield and this is something that a lot of dividend investors
get wrong. If you’re living off your investments, so depending on your stocks
for a monthly income, then you have to look at the total return in the
When you do this,
that amount you need invested changes completely and actually living off your
investments becomes a real possibility.
Shares of Disney
produced a 12% annual return over the last five years. That’s stock price gain
and dividends. At that return, you’d need just $99,800 in the shares, not the
million we saw in the graph, to produce that thousand dollars a month.
Better yet, shares of Apple. Remember at that 1.5% dividend yield, we needed $810,000 in the stock for that thousand-dollar dividend? On Apple’s 17.5% annual return over the last five years, you’d need just $68,500 to generate $12,000 a year in profits.
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What are the Best Dividend Stocks to Make $1,000 a Month?
While these stocks are some of the most popular among investors and some great investments for that combination of return and dividend payment…as you see, they aren’t necessarily the best for someone that needs to live off their dividends.
The fact is, other than a few on the list, dividend cash flow isn’t really the goal for these companies or investors. For that, you need to look for other stocks with higher dividend yields.
Check out these videos for stocks with the highest dividends!
How Much Money Do I Need to Invest to Make $1,000 a Month?
So it’s probably not the answer you were looking for because even with those high-yield investments, it’s going to take at least $100,000 invested to generate $1,000 a month. For most reliable stocks, it’s closer to double that to create a thousand dollars in monthly income.
Don’t think of it as something you need TODAY though. Investors get impatient, they reach for those stocks or hype of returns that will make them rich overnight but guess what, those stocks will also make you BROKE just as fast.
Focus instead on building a good portfolio of stocks from different sectors and with sustainable dividend yields. Give yourself ten years and put a few hundred into your account every month. I know it seems like an eternity but in ten years, along with the money you invested and your returns, you’ll be closing in on that $1,000 monthly passive income. You’ll be glad you started when you did and will be able to relax as your dividend stocks pay the bills.
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The moral here is you can’t just look at dividends. Learn to look at the total return in shares of stock to see where a company can take you. Reinvest your dividends as long as you can to grow the portfolio so when you need that monthly income, it’s going to be there to support you. If you want to make $1,000 a month off dividend stocks and live off your dividends then you’ll need to buy shares of high yield dividend stocks as well.
Read the Entire Dividend Investing Series and Live Off Your Dividends!