Passive Income: I’m on Track to Hit $2,000/Year

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This year, I am on track to hit $2,000 per year in passive dividend and interest income. Since I started covering my journey to $2,000 per year in dividend income, I’ve managed to increase my dividend and interest earnings by over $500. The way this worked was, I started out the year earning $1,200 per year in dividend income, then I bought some new investments and had a few of my stocks increase their dividends. As a result, I got up to $1,750 per year in passive investment income. In this article, I’ll explore how I did it, and how I plan to get to the next level.

How I got to $1,750/year so quickly

One of the biggest ways I increased my passive income this year was by buying high yielding guaranteed investment certificates (GICs). I saw that 5% yields were available on GICs, so I put $5,000 of my savings into them. That’s $250 in passive income right there.

Another way I rapidly scaled up my passive dividend income was by buying bank stocks like the Toronto-Dominion Bank (TSX:TD). For the most part, I bought the majority of my banking stocks last year, although I did add to my Bank of America position this year during the March banking panic. That enabled me to significantly increase my base of dividend-paying shares. On top of that, I accumulated some dividend-paying tech stocks like Taiwan Semiconductor Manufacturing, and the bank stocks I just mentioned increased their dividends.

I enjoyed a sizable increase in my projected dividend income from TD Bank alone. At the start of the fiscal year, TD hiked its dividend by 8%. From that one dividend hike alone, I got about a $40 increase in my dividends – and other stocks in my portfolio hiked their dividends as well.

How I plan to hit the $2,000 milestone

Having shown how I got to $1,750 in 2023 projected dividends, it’s now time to reveal how I plan to get the extra $250, and hit my $2,000/year goal.

Truth be told, I’ll probably do it mostly with GICs. GIC yields are pretty high right now. Only a few months ago, you could get 5% on a one-year GIC. Today, you can get around 4.8%. That’s a much better yield than you’ll get on most stocks. I’ve been putting a lot of money into GICs this year because the yields are so high now, you almost can’t afford not to own them. I’ve been making some small purchases of dividend stocks here and there, too, but I’m really focused on GICs above all else this year. I’ll probably invest about 60% of what I save this year into them.

Foolish takeaway

As I showed in this article, it’s quite possible for a diligent saver to get to $2,000 per year in passive dividend income. I am most of the way there already, and I’ve only been saving for about four-and-a-half years. It’s definitely do-able. Another $5,000 into 5% yielding GICs would take me to $2,000 in projected dividend income. My dividend stocks hiking their payouts doesn’t hurt either.

The post Passive Income: I’m on Track to Hit $2,000/Year appeared first on The Motley Fool Canada.

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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Fool contributor Andrew Button has positions in Toronto-Dominion Bank, Bank of America and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Bank of America and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

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