Want $1,000 in Passive Income? Buy This Many Shares of a Certain TSX Stock

Various Canadian dollars in gray pants pocket

Many investors, including me, dream of having their stocks pay for their everyday expenses. When that’s achieved, it’s referred to as financial independence. This is a goal of many investors, because it allows them to spend more time on things they’re passionate about. One way that investors can achieve financial independence is by generating a source of passive income. There are different ways to do this, but the method with the lowest barrier to entry, in my opinion, is by investing in dividend stocks.

Although there are many dividend stocks trading in Canada, it’s vital that investors choose the right ones. In my opinion, those are stocks that have a large moat, a long history of paying dividends, and a tendency to increase its distribution. By focusing on stocks with those three characteristics, investors could give themselves a better chance of seeing their source of passive income grow over time.

In this article, I’ll discuss why Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is a great stock for your portfolio. I’ll also tell you how many shares it’ll take for investors to generate $1,000 in passive income through Bank of Nova Scotia stock.

Why this is a great dividend stock to own

There are many reasons why I think Bank of Nova Scotia would be an excellent stock for your portfolio. First, it’s one of the largest banks in Canada. This country offers investors several outstanding banking companies. Of those, Bank of Nova Scotia comes in as the third largest in terms of assets under management, market cap, and revenue. This leading position should help the company continue to hold a competitive advantage over many of its peers over the coming years.

In addition, Bank of Nova Scotia is attempting to expand its international presence. By growing in other countries, this company could bring a lot more stability to its business. It would also make Bank of Nova Scotia stock safer, in a sense, as it would be able to weather the storm, should long periods of economic uncertainty affect its North American business. As of its 2021 annual report, nearly a third of Bank of Nova Scotia’s earnings came from sources outside Canada.

How many shares would it take to generate $1,000 in passive income?

Bank of Nova Scotia is known for being a high-yield dividend stock. This means that its dividend yield is higher than the majority of other dividend-paying stocks. As of this writing, Bank of Nova Scotia’s forward dividend yield is 6.35%. This is an important metric to consider, because it means that investors will get more bang for their buck. In other words, it would take less money invested in order to achieve that goal of generating $1,000 in passive income.

With that said, how many shares would it take to generate $1,000 through Bank of Nova Scotia stock? On an annual basis, this stock will pay investors $4.12 per share. That means, you would need 243 shares in order to achieve that $1,000 mark. As of this writing, that would mean investing $15,760 into Bank of Nova Scotia stock.

Although that may seem like a lot of money to entrust into a single stock, there are very few dividend stocks that I’d be comfortable putting that much money into. Bank of Nova Scotia is well known for its long history of paying dividends. In fact, this company has managed to pay its shareholders a portion of its earnings in each of the past 189 years. In addition, over the past 11 years, Bank of Nova Scotia has managed to increase its dividend distribution. Because of those characteristics, I’ll continue to buy shares in this company.

The post Want $1,000 in Passive Income? Buy This Many Shares of a Certain TSX Stock appeared first on The Motley Fool Canada.

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Fool contributor Jed Lloren has positions in BANK OF NOVA SCOTIA. The Motley Fool recommends BANK OF NOVA SCOTIA. The Motley Fool has a disclosure policy.