Passive Income in 2021 – The EASIEST Way To Make $1000 A Month

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How much stocks do you need to buy to make
1K a month When you think of the stock market, the first
thing that comes into mind is this complicated world of the stock market. With so many confusing charts, its easy to
get lost. But what everyone knows for sure is that you
can buy stocks and sell them whenever their rise but there is another way that professional
investors use to make a fortune. In 2018, warren Buffett received 3.8 billion
dollars in cash from his 5 major investments. Don't get me wrong, he didn't sell his shares
to earn that much.

BUt instead, these 5 companies earned a ton
of money during the year. Since warren buffet is an investor in these
companies, they had to share their profits with Buffett. That's called dividends. Simply put it, there are two types of companies
in the stock market, companies that have already matured and have profitable and sustainable
business models so whenever they make a profit, they don't know what to do with that money,
therefore they end up sending it to their shareholders, on the other side you have companies
who are still trying to turn a profit like Tesla.

They might report a profit, but the company
needs that money to grow further, so here is a question we will try to answer in this
video, how many stocks you have to buy or how much you have to invest in the stock market
so that you receive a thousand dollars from your investments every month without selling
your stocks? But before we do that, we have to understand
a few key concepts. How dividends work? What are the best dividend stocks? And how to avoid the dividend trap that might
lead you to lose your entire investment? Dividends – The Real Passive Income
Since the dot com bubble, the nature of investing has changed. Before that, investors' main concern was to
invest in companies that would turn a profit and share these profits with them since, as
shareholders, they are entitled to the company's profits. But entrepreneurs such as Jeff Bezos stepped
in and completely changed the game. The goal was no longer to maximize profits
but rather to grow the company even if that means not paying a dime in dividends to shareholders. A company that only burns cash and isn't profitable
looks like a bad business, but the strategy is to keep operating at a loss until you dominate
the entire industry and then generate profit since you will be the only player in the market.

And that's what Amazon did for the last 25
years. Despite its 1.6 trillion dollar valuation,
it never paid a dime in dividends to its shareholders. In fact, it avoided taxes for 2 decades since
it was reporting a loss. In 2019, it turned 11.5 billion dollars in
net income while its competitor Walmart generated 15.2 billion dollars and paid 2.16 dollars
in dividends per share, but at the end of the day, Walmart was valued at 1/3 of an amazon. Amazon might seem like a more promising stock
in the future, but if you want passive income, Walmart looks like a better option. And the stock market is filled with such examples. There are just a handful of tech companies
that pay dividends. The rest, especially the big ones, would rather
re-invest what they earn instead of paying you. 2. High Dividends -The Perfect Scam To Attract
Investors While stocks that pay high dividends are extremely
seductive, they aren't always the best choice. In fact, dividends sometimes are used to mislead
investors and rip them off.

The company might be on the verge of bankruptcy,
or it might be barely surviving. Its stock is falling year after year, so one
way to make it's stock attractive to investors is by offering high dividends. Take Universal corporation or UVV. If you take a look at its dividend rate, you
will see a ratio of 7.16 percent. That is unimaginable high. You probably won't find anything like that
in the entire market. Even the world's largest company, apple, pays
around 2 percent in dividends. But I personally would not buy this stock
and wouldn't advise anyone else to do that. The stock price was around 50 dollars 5 years
ago, and you might imagine that it might have grown slightly since then at least, but it
didn't, the price fell to 43 dollars, and the company does seem to have a future, so
it pays high dividends to keep its stock attractive to investors because who knows where else
the stock price might be a few years from now. Compare that to apple that pays only 2 percent
in dividends but the stock price rose by 337 percent in the same period.

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Cashflow is great, but losing your principle
is bad. And the stock market is filled with such stocks. So, don't choose to buy a stock solely because
it has the highest dividend yield. 3. Best Dividend Stocks Ever You might be wondering by now that are there
any good companies that are both growing and paying high enough dividends? The answer is Yeah, there are! Take Coca Cola, for example, the company exists
since 1886, and it began paying dividend before you probably were born, it has quite a good
dividend rate of 3.2 percent. Of course, the stock price hasn't been growing
as some of the tech companies because many believe that there aren't much left for coca-cola
to grow, but it is definitely not going to fall the next day. The home depot is another example.

They have been paying a dividend yield of
2.5 percent consistently. The stock price doubled in the last 5 years. Johnson & Johnson has been around since 1886
and is regarded as the king of dividends. It's a big name in the pharmaceutical industry. It also plays a key role in developing the
vaccine for the current pandemic. Its stock price might just boom once the vaccine
is ready. The companies that don't usually pay dividends
are tech companies since the idea behind it is that, the company would be far better if
it re-invests that money back and grows faster. Companies such as Google, Facebook, and Tesla
don't pay a dime in dividends, which is why investors love Apple. It's a tech company that both excels in hardware
and software. It has a built-in ecosystem that provides
it with consistent cash flow. Its stock price rises as much as other tech
companies, but it also pays a dividend yield of around 2 percent. So let's try to answer the question. 4. How Much do you need to invest to make a thousand
dollars a month? Well, since dividend yields are different
from one stock to another and we don't want to invest in companies that don't seem to
do great in the long run.

We will take into account companies that aren't
only paying great dividends but also would grow over time, such as apple, coca-cola,
Johnson & Johnson, the home depot, and so on. It difficult to find an exact dividend yield
since stock prices change every year, so does dividend yields. It also depends on the portfolio you build,
but let's assume that you are going to get 2.5 percent annually. To receive a thousand dollar of passive income,
you need to invest around 500 thousand dollars, that will provide with 12500 dollars a year,
or slightly higher than 1 thousand dollars a month. And suppose you want to make enough from dividends
to retire complete. In that case, you need to invest at least
2 million dollars to make 50K dollars annually. I guess you aren't impressed because investing
half a million dollars in real estate, for example, would provide you a much higher passive
income than 12500. And that's why investors are more concerned
about the stock price than dividends. Amazon might not have paid a dime in dividends,
but its stock rose by 522 percent in the last 5 years.

Amazon investors have earned much more than
any dividend investors could possibly imagine. Does that mean investing in dividend stocks
is nonsense! Not really! If you have a big enough portfolio that's
invested in wide variety of stocks, making dividend stocks part of your portfolio is
a good decision. But you also have to consider that these stocks
are growing as well so if you use these dividends to buy more stocks of the company, you will
end up with a pretty good investment. The home depot's stock price increased by
26 percent last year and it paid around 2.5 percent in dividends, which makes it a pretty
appealing investment. On the other side, if you are just starting
out with a small amount such as a few thousand dollars, you can't afford to buy a property
to rent it out, so starting with dividend stocks might be an option to consider for
some.

As found on YouTube

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