Have you been delaying investing in stocks as you cannot risk losing money in the market volatility? Delaying investing is expensive. The way the stock market works, staying in the market pays off more than waiting to invest in the dip. And if losing out on liquidity is your concern, a $500 monthly investment could earn you $256 in passive income by the end of 2024.
Delaying investing could cost you $256 in 2024
We are already in the second month of the new year, and any more delays can make you lose the opportunity to earn $256. Another way to look at it is a $500 investment per month can give you another $256 to invest at the start of 2025. It can address your concern that you have no money to invest. Alternatively, if you hold onto the $6,000 in cash ($500 for 12 months), it would remain $6,000 or probably $0 as expenses keep coming.
One stock to invest $500 in each month
The stock market offers various types of stocks. If you want to earn passive income, dividend stocks can help you. BCE (TSX:BCE) stock gives quarterly payouts and is trading at a lower price as high interest rates have put its business in a tight spot.
After growing dividends for 15 straight years, BCE paused its dividend growth in 2024 as its interest expense increased. Moreover, some one-off expenses and planned capital expenditures reduced its net income. As a result, the stock is down 27% from its April 2022 peak and is hovering in the $51 to $58 range. The telco can maintain its current dividend per share as it did in 2006 and probably resume dividend growth once the Bank of Canada announces interest rate cuts.
How does a $500 monthly investment in BCE give you $256 in passive income?
BCE pays out dividends on a quarterly basis. Its first quarterly dividend for 2024 of $0.9675 per share is due on April 15. If you invest $500 every month in BCE stock throughout the 12 months of 2024, you could own 104 shares at the end of 2024 and get a total dividend of $256 by January 15, 2025, when the fourth quarterly dividend is paid.
The table below shows the quarterly bifurcation of how your investments will look.
| Quarterly Investment | New BCE Shares | Total BCE Share Count | Total Dividend | Dividend per Quarter |
| $1,500.00 | 28 | 28 | $27.09 | $0.9675 |
| $1,500.00 | 26 | 54 | $52.25 | $0.9675 |
| $1,500.00 | 25 | 79 | $76.43 | $0.9675 |
| $1,500.00 | 25 | 104 | $100.62 | $0.9675 |
| $6,000.00 | $256.39 |
Since January is over, you can invest $1,000 in BCE and another $500 next month. The stock price will likely remain bearish in the first half of 2024 and grow after interest rate cuts are announced in the second half. A $1,500 investment in the first quarter could buy you 28 shares of BCE at a $53 average price. These shares can earn you $27 in passive income by April 15.
As the year passes and the economy improves, BCE stock prices could surge. Hence, I assume your average cost per share increases to $58, $59, and $60 in the next three quarters. At these prices, $1,500 will buy you 26, 25, and 25 shares in the respective quarters.
Adding up your new shares, your total BCE share count increases to 104 (28+26+25+25). While you will get $256 in dividend income, you will also benefit from capital appreciation. You won’t have to wait much for this return.
Investor tip
If you are considering withdrawing the dividend amount, consider buying BCE shares through a Tax-Free Savings Account (TFSA), as it allows tax-free withdrawals. But if you are looking to reinvest that amount, consider investing through the Registered Retirement Savings Plan (RRSP), as you can deduct the $6,000 invested amount from your taxable income.
