Passive Income: How Much Should You Invest to Earn $1,000 Every Month?

Passive income is awesome. And when it comes in monthly, that’s even better. But what if I told you that you could create $1,000 in passive income each and every month? What’s more, you could do this safely?

Let’s get right into it.

First, some caveats

If you’re going to create passive income each and every month at this level, it’s important to note a few things. First, the most important for the purpose of this example is that passive income includes two items. Dividends, yes, but also passive income through returns.

The reason you purchase stocks in the first place is to create returns, because it’s passive income. So when doing your calculations it’s incredibly important to look back on the performance of your dividend stocks. After all, what does it matter that you’re bringing in dividends if your shares are falling lower and lower?

Another important note is that to create $1,000 in passive income, undoubtedly, it’s going to take a larger investment than $2,000. So for this example we’re going to look at a larger investment. That being said, longer-term investments of $2,000 while reinvesting dividends could certainly reach that $1,000 goal over time.

Look to Dividend Aristocrats

Now if you want passive income that provides both returns and dividends, I would suggest Dividend Aristocrats first and foremost. These are long-term dividend providers that aren’t going to cut their dividend or skip a dividend increase unless they absolutely have to. What’s more these companies have usually been around for decades, with plenty of cash on hand to help them through difficult times and keep dividend payments coming.

Some of the best Dividend Aristocrats I would consider are in the infrastructure sector. These are companies we’ll need no matter what. They provide the roads we drive on, the cellphone towers, bridges, sewers, you name it! No matter what happens, we need these basics. Which is why they have been a solid producer for decades.

For one that would provide monthly passive income, I would look to energy stocks that are branching out into the renewable energy sector. I would therefore consider Dividend Aristocrat TC Energy (TSX:TRP) a strong buy as it continues to strengthen its balance sheet while not forgetting about its investors.

What investors could create

Now, to create $1,000 in passive income each month, you’re going to need to consider both returns and dividends, as mentioned. TRP stock currently holds a dividend yield of 7.03%. Shares are down 7% in the last year, but up 16% since the market bottomed out on October 27, 2023.

Now let’s say that we see shares return to all-time highs of $73, and that’s your goal. In that time you then continue to see dividends pile in. Here is how much you would have to invest to create that $1,000 per month (or $12,000 per year) in passive income through dividends and returns.

Now you have total returns of $11,564.99 plus dividends of $1,837.68. That’s total passive income of $13,402.67! You’ll therefore be bringing in more than $1,000, at $1,116.89 each and every month.