How to Make $50 a Month in Dividends: Beginner's Guide

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Get Started Making Money From Dividends Now!

Today’s topic is a beginner’s guide about how to make $50 a month in dividends.

Because making passive income from dividends is a good thing. It’s one step in the right direction to earning your financial freedom.

So, I’m going to show you how to collect dividends in 5 easy steps. Let’s get started…

Disclosure: At no cost to you, I may get commissions for purchases made through links in this post.

How To Make $50 A Month In Dividends: Your 5 Step Plan

When you are beginning something new. It’s a good idea to follow clear steps to accomplish your goal.

So, here are the 5 steps I recommend you follow to earn $50 a month in dividends:

Open and fund a brokerage account
Identify dividend stocks and develop a watch list
Select the dividend stocks you would like to invest in
Invest in the dividend stocks of your choosing
Reinvest all dividends received

These 5 steps for getting dividends will serve as an outline for the next part of this article. As I will dive into them in detail.

Then, I will answer a few frequently asked questions from beginning dividend investors. Before I wrap up.

Let’s move on to step 1 in your goal to get $50 a month from dividends…

1. Open And Fund A Brokerage Account

To get started investing in stocks that pay dividends, you need a brokerage account. But do not let this first step intimidate you.

Because it may be the easiest step of all. Since many new online stock brokers have entered the market. That caters to new and small investors.

My favorite online broker is Webull.

I have bought and sold stocks on the Webull app for the last several years. So, I can attest to its ease of use.

Best of all, Webull will guide you through the application process. And their help screens are perfect. For when you are ready to invest in your first dividend stock.

You can sign up for a Webull account here.

Let’s move on to step 2. In this guide to profiting from $50 a month in dividends…

2. Identify Dividend Stocks And Develop A Watch List

First of all, I’m going to assume you would like to invest in individual stocks. If not, I will give you an alternative a little later on.

But first, to start your dividend payments plan, you need to find dividend stocks. In other words, identify dividend stocks to invest in.

Finding Dividend Stocks

I’ve written an entire guide about finding the best dividend stocks. Here are few sources to consider that I pulled from that article.

First of all, consider the products and services you like and use every day. Then look up the company behind the product. And see if they pay a dividend.

As a beginning dividend investor. It’s always a good idea to invest in companies you know and understand.

Here is a good example. Do you like Apple products?

Then you are in luck. Because Apple stock pays a dividend.

Dividend stock lists. You may have heard about the list of Dividend Kings, Dividend Aristocrats, and Dividend Achievers.

These lists are full of companies that have paid and increased dividends. For many years in a row.

And don’t forget about my model dividend stock portfolio.

It’s a deep list of 40 stocks that I own. And have published dividend stock reviews for each company on the list.

Make A Dividend Stock Watch List

Next, make a list of about 20 dividend stocks. From the stocks, you have just identified. No further analysis of the company or its stock is required at this point.

Just make sure you have a diverse range of companies. Representing different industries.

For example, here are typical industries known for dividend-paying stocks:

Banking
Business services
Consumer goods
Health care
Manufacturing
Pharmaceuticals
Real estate investment trusts
Retail
Technology
Utilities

So, now you should have a list of about 20 dividend stocks. Selected from a range of industries.

This is your dividend stock list to watch. From which you will select your dividend stocks for investment.

But, if you do not want to go to all of this trouble. I understand.

Because finding and analyzing (our next step) dividend stocks. Is a lot of work. So, to save time, you may want to consider the Simply Investing Report.

First of all, Simply Investing has identified and covers hundreds of the best dividend stocks. Located in both the U.S and Canada.

Furthermore, each month Simply Investing delivers their dividend stock pick recommendations right to your inbox. On which of those stocks are the best buys at the time.

I have subscribed to Simply Investing for several years. And find it to be a valuable resource as a dividend stock investor.

If you are interested, you can learn more about Simply Investing here.

With that side note taken care of. We are ready for step 3 in our quest to accumulate $50 a month in dividends…

3. Select Your Dividend Stocks To Invest In

This step involves doing some basic stock research. To select the best dividend stocks for your investment dollars. And you will be selecting from the watch list you just compiled in step 2.

I’ve written an entire guide about analyzing and selecting dividend stocks.

But for today, I want to review several of the most important dividend stock metrics to be aware of. To get you started sooner rather than later.

Onto to our first dividend metric…

Dividend Yield

Calculated as a stock’s annual dividend per share. Divided by the price per share.

The calculation gives you the dividend yield percentage. Multiply it by the amount of money you intend to invest in a stock. And get the annual amount of cash dividends you will receive.

Higher dividend yields mean making more money from dividends. But higher dividend yields also indicate greater investment risk.

Dividend Growth

Look into how many years in a row the company has increased its dividend. Because organic dividend growth will accelerate your progress. In reaching your goal of making $50 a month off dividends.

Furthermore, long periods of dividend growth indicate higher dividend safety. Which is the next metric I want to mention…

Dividend Safety

Dividend safety is very important. Because you do not want to invest in stocks where the possibility of a dividend reduction is high.

Moderate (3-5%) dividend yields. And many consecutive years of dividend increases are both signs of dividend safety.

As is a stock’s dividend payout ratio. It reflects the percentage of cash or accounting earnings that a company pays out to investors. In the form of dividends.

If you would like to learn more about these metrics. And much more about the topic of dividend investing. Then check out this comprehensive guide about how dividend stocks work.

But, continuing with today’s topic. We are now ready for step 4 in our guide about how to amass $50 a month in dividends…

4. Invest In The Dividend Stocks Of Your Choosing

As I said earlier, the Webull app. Or, their customer support. Can walk you through how to buy a stock if you are unsure of how to go about it. So, I won’t go through those mechanics here.

On the other hand, I want to emphasize some things you should think about. When investing in your first dividend stocks. And building a dividend income portfolio…

Go For A 5 Stock Portfolio As A Starting Point

Academic research suggests that 20-25 stocks are optimal. To balance the benefits of diversification. Versus the potential for investment returns.

On the other hand, I suggest you target a 5 stock portfolio to get started. You can always add more stocks as money permits. And you get more comfortable with the process.

My only rule is this. Make sure each of the 5 stocks comes from a different industry.

For example, here are 5 of my favorite dividend stocks. And the industries in which they operate.

Clorox for consumer goods
NextEra Energy in the utility sector
Automatic Data Processing providing business services
Johnson & Johnson in diversified health care
Realty Income a real estate investment trust

For my taste, this would be a pretty sweet dividend portfolio for a beginner. It’s tilted a little more to dividend growth versus dividend yield. And has a high degree of dividend safety.

Invest Regularly And Consistently For $50 A Month In Dividends

It is important to invest regularly. Successful dividend investing relies on this.

I suggest adding a fixed dollar amount to one or more of your chosen dividend stocks every month. This is known as dollar-cost averaging.

First of all, doing so at a set point each month is easy to remember. Put it on your calendar each month: “buy dividend shares today”.

Furthermore, you will take advantage of the ups and downs of the stock market. By buying more shares when the market is down. And investing in fewer shares when the market is up.

That’s one of the values of choosing a fixed dollar amount. Along with taking the emotion out of investing.

This brings us to the last step in our plan to generate $50 a month with dividends…

5. Reinvest All Dividends Received

Now that you have created a small dividend income portfolio from dividend stocks. You will start to receive regular dividend payments.

I suggest reinvesting all dividends payments received back into your dividend portfolio. You can do so in one of two ways:

1. Tell your broker to automatically reinvest the dividends back into the stock that paid them.

2. Let the dividends accumulate in cash. And reinvest them as part of your regular monthly investments.

By reinvesting dividends, you now have the 3 most powerful elements of dividend investing working in your favor. For building your passive income stream.

These elements are:

Investing new money regularly
Benefiting from company dividend increases
Reinvesting all dividends

Get these aspects working for your investments now. And you will be on your way to making even bigger money from dividends in the future.

That’s it! Your 5 step plan for building $50 a month in dividends. But wait. I have more for you.

Because I want to address several frequently asked questions. Then, I will wrap up.

questions about collecting $50 a month in dividends

Can I Make $50 A Month In Dividends Using A Fund?

Yes. You can earn monthly dividends by investing in one or more mutual funds. Or exchange-traded funds (ETFs) that pay dividends.

There are many to choose from. But my favorite is the Vanguard High Yield dividend ETF (VYM).

Advantages Of Funds For $50 A Month In Dividends

Funds eliminate the time required to find and select individual dividend stocks. Also, they provide broad and immediate diversification.

Disadvantages Of Funds

First of all, you have to take the fund good dividend stocks. With the not-so-good. Because they are all held by the fund.

Furthermore, funds charge fees. The fees eat into your dividend income. So, it’s best to stick with a low-cost ETF, like VYM.

How Much Do I Need To Invest To Make $50 A Month In Dividends?

The amount of investment required depends.

Depends on what? You may be asking.

It depends on the dividend yield of your dividend stock portfolio. Which is influenced by the dividend stocks you choose to invest in.

Since every portfolio is different. Let’s use a range to see the amount of investment required.

At a 3% portfolio yield. A $20,000 investment is required.

On the other hand, assuming a 4% portfolio yield, a $15,000 portfolio is required.

Finally, assuming a 5% desired dividend yield. $12,000 in dividend stock investments are required.

Learn more about calculating investment requirements here.

How Long Will It Take Me To Make $50 A Month In Dividends?

The answer to this question depends also. On several different factors. So, let’s make a few assumptions to answer this question…

First, let’s say you invest $100 per month into your dividends stocks. That’s just a little over $3 per day.

Hopefully, you can afford that amount. Maybe even a little more? I don’t know. It’s your decision.

Second, we will assume you earn a 10% average annual total return on investment. This is the long-term stock market average.

Finally, you target a $15,000 portfolio with a dividend yield of 4%.

Using these assumptions, it will take about 8 years to build your portfolio. And approximately $9,800 of your money.

The rest of the money will come from reinvested dividends. And increase in share prices.

If this seems like a lot of money. Or, a very long time. Well, it is.

Remember that dividend investing is a journey. Not a destination. And you are only committing to saving and dividend investing with just a few dollars per day. That’s a big reason why it takes so long.

Save More And Invest It In Your Dividend Stocks

You can speed up the process by saving and investing more. So, fine-tune your budget. Reduce expenses and put any extra money to work in dividend stocks to accelerate your progress.

Just think about it in this simple way. Double your savings to a little more than $6 a day. And you can cut the 8 years down to about 4.

Here are a couple of suggestions to increase the amount you can invest…

Sign up for Rakuten. And save extra money on all of our online purchases by receiving cash rebates on everything you buy.

Also, get $10 free just for signing up and making your first purchase with Rakuten.

Finally, make some extra money by taking consumer surveys for cash. I like to use Survey Junkie to make a little extra money.

So, don’t delay. Sign up for these ways to make money. And accelerate your progress to $50 in monthly dividends.

Finally, one last frequently asked question that comes up. About making monthly dividends…

Will Taxes Be Due On My Dividends?

Taxes will probably be due on your dividends. It depends on your specific tax situation. And everyone’s situation is different.

So, consult with your tax accountant if you are unsure.

But, I can tell you this about taxes for certain. Put your dividend stocks in an individual retirement account (IRA).

And taxes will be deferred. Or best case, never owed. Depending on the type of IRA you choose.

If you have been meaning to open and fund an IRA. Then, by all means, do so.

Okay. That’s a wrap for today.

Here is a summary before you on your way…

Summary: How To Make $50 A Month In Dividends

conclusions about earning $50 a month in dividends

Follow these 5 steps. And you will be well on your way to collecting $50 a month with dividends:

Open and fund a brokerage account
Identify dividend stocks and develop a watch list
Select the dividend stocks you would like to invest in
Invest in the dividend stocks of your choosing
Reinvest all dividends received

My Favorite Resources For Making Dividends

I mentioned several apps and resources throughout the article. To assist in building your dividend income to the level you desire.

They are summarized here for your convenience…

how to profit from $50 a month in dividends

Author Bio: Tom Scott founded the consulting and coaching firm Dividends Diversify, LLC. He leverages his expertise and decades of experience in goal setting, relocation assistance, and investing for long-term wealth to help clients reach their full potential.