PEY:CC - How to Generate $500 in Passive Income and $368K in Returns
Passive income is something every investor is interested in, especially right now. Today, I’m going to show you just how much you can lock in — first, by investing to create $500 per year and eventually moving up to $500 per month.
Find the right stock
If you’re looking for a passive-income stock, you’ll want a strong, monthly payer that’s bound to be around within the next decade. Today, I’m going to focus on Peyto Exploration & Development ( TSX:PEY ). The main reason? The company has an incredibly high dividend yield at 10.73% as of writing. Yet it remains in value territory trading at 6.3 times earnings.
Of course, part of the reason this stock has a high yield and cheap price is, it’s in the oil and gas sector. This sector had a wild ride in the last year, but the company is starting to show improvements in the last few months. Passive-income seekers wanting more returns and a lock-up of this yield should do so soon.
Start off with $500 per year
To start, let’s say you’re an investor who wants to create $500 in passive income each year. Right now, Peyto stock’s 10.73% dividend yield comes to $1.32 per share annually. This would mean to create $500 in income annually, you would need about 378 shares.
Here’s how that works out below in terms of how much you would need to invest as well.
| COMPANY |
| RECENT PRICE |
| NUMBER OF SHARES |
| DIVIDEND |
| TOTAL PAYOUT |
| FREQUENCY |
| TOTAL INVESTMENT |
| PEY |
| $12.59 |
| 378 |
| $1.32 |
| $500 |
| Annually |
| $4,759.02 |
As you can see, to create that $500 per year, an investment of $4,759 doesn’t really break the bank. However, it might if you’re seeking $500 per month . Let’s look at how much you’d need to invest to get there.
| COMPANY |
| RECENT PRICE |
| NUMBER OF SHARES |
| DIVIDEND |
| TOTAL PAYOUT |
| FREQUENCY |
| TOTAL INVESTMENT |
| PEY |
| $12.59 |
| 4,545 |
| $1.32 |
| $500 |
| Monthly |
| $57,221.55 |
Making it monthly
As you can see, that’s a far larger investment. Now, if you were to reinvest that $500 each year, let’s see how long it would take to reach $500 per month in passive income. From there, you decide to put an additional $1,500 into Peyto stock. Based on its historical data, it would take 23 years to reach $6,003 in annual passive income, or $500 each month.
| Year |
| Shares Owned |
| Annual Dividend Per Share |
| Annual Dividend |
| After DRIP Value |
| Annual Contribution |
| Year End Shares Owned |
| Year End Stock Price |
| New Balance |
| 1 |
| 378 |
| $1.34 |
| $505.41 |
| $5,289.77 |
| $1,500.00 |
| 523.71 |
| $13.94 |
| $7,298.98 |
| 2 |
| 523.71 |
| $1.36 |
| $714.23 |
| $8,046.14 |
| $1,500.00 |
| 669.36 |
| $15.43 |
| $10,327.13 |
| 3 |
| 669.36 |
| $1.39 |
| $931.13 |
| $11,297.71 |
| $1,500.00 |
| 814.01 |
| $17.08 |
| $13,902.72 |
| 4 |
| 814.01 |
| $1.42 |
| $1,155.00 |
| $15,102.73 |
| $1,500.00 |
| 956.82 |
| $18.91 |
| $18,090.32 |
| 5 |
| 956.82 |
| $1.45 |
| $1,384.78 |
| $19,524.73 |
| $1,500.00 |
| 1097.02 |
| $20.93 |
| $22,960.39 |
| 6 |
| 1097.02 |
| $1.48 |
| $1,619.45 |
| $24,633.23 |
| $1,500.00 |
| 1233.96 |
| $23.17 |
| $28,589.99 |
| 7 |
| 1233.96 |
| $1.51 |
| $1,858.03 |
| $30,504.39 |
| $1,500.00 |
| 1367.09 |
| $25.65 |
| $35,063.51 |
| 8 |
| 1367.09 |
| $1.54 |
| $2,099.65 |
| $37,221.76 |
| $1,500.00 |
| 1495.93 |
| $28.39 |
| $42,473.56 |
| 9 |
| 1495.93 |
| $1.57 |
| $2,343.49 |
| $44,877.23 |
| $1,500.00 |
| 1620.13 |
| $31.43 |
| $50,921.91 |
| 10 |
| 1620.13 |
| $1.60 |
| $2,588.82 |
| $53,571.91 |
| $1,500.00 |
| 1739.41 |
| $34.79 |
| $60,520.55 |
| 11 |
| 1739.41 |
| $1.63 |
| $2,835.00 |
| $63,417.22 |
| $1,500.00 |
| 1853.56 |
| $38.52 |
| $71,392.92 |
| 12 |
| 1853.56 |
| $1.66 |
| $3,081.47 |
| $74,536.08 |
| $1,500.00 |
| 1962.45 |
| $42.64 |
| $83,675.13 |
| 13 |
| 1962.45 |
| $1.70 |
| $3,327.76 |
| $87,064.22 |
| $1,500.00 |
| 2066.03 |
| $47.20 |
| $97,517.45 |
| 14 |
| 2066.03 |
| $1.73 |
| $3,573.47 |
| $101,151.56 |
| $1,500.00 |
| 2164.29 |
| $52.25 |
| $113,085.92 |
| 15 |
| 2164.29 |
| $1.76 |
| $3,818.29 |
| $116,963.86 |
| $1,500.00 |
| 2257.27 |
| $57.84 |
| $130,564.05 |
| 16 |
| 2257.27 |
| $1.80 |
| $4,061.97 |
| $134,684.44 |
| $1,500.00 |
| 2345.05 |
| $64.03 |
| $150,154.80 |
| 17 |
| 2345.05 |
| $1.84 |
| $4,304.32 |
| $154,516.12 |
| $1,500.00 |
| 2427.74 |
| $70.88 |
| $172,082.69 |
| 18 |
| 2427.74 |
| $1.87 |
| $4,545.22 |
| $176,683.34 |
| $1,500.00 |
| 2505.49 |
| $78.47 |
| $196,596.19 |
| 19 |
| 2505.49 |
| $1.91 |
| $4,784.60 |
| $201,434.52 |
| $1,500.00 |
| 2578.46 |
| $86.86 |
| $223,970.31 |
| 20 |
| 2578.46 |
| $1.95 |
| $5,022.42 |
| $229,044.68 |
| $1,500.00 |
| 2646.83 |
| $96.16 |
| $254,509.50 |
| 21 |
| 2646.83 |
| $1.99 |
| $5,258.71 |
| $259,818.30 |
| $1,500.00 |
| 2710.79 |
| $106.45 |
| $288,550.82 |
| 22 |
| 2710.79 |
| $2.03 |
| $5,493.52 |
| $294,092.52 |
| $1,500.00 |
| 2770.55 |
| $117.83 |
| $326,467.46 |
| 23 |
| 2770.55 |
| $2.07 |
| $5,726.91 |
| $332,240.64 |
| $1,500.00 |
| 2826.31 |
| $130.44 |
| $368,672.66 |
You’ll also notice you now have a portfolio worth $368,672.66 based on this historical performance! In the case of Peyto stock, I want to mention that this company has cut its dividend in the past. So, I wouldn’t exactly call it the safest and most secure investment for dividend passive income. That being said, it’s a great example to show how you can lock up long-term passive income for years.
The post How to Generate $500 in Passive Income and $368K in Returns appeared first on The Motley Fool Canada .
Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .
2023