How Much Can You Make in Dividends with $50K?

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A $50,000 Dividend Portfolio For Passive Dividend Income

Today, I will debate and discuss how much you can make in dividends with $50K. I will also recommend several tips for building your $50K dividend portfolio.

Having $50K in dividend stocks is a worthwhile goal, so let’s start.

How Much Can You Make in Dividends with $50k?

Your dividends on a $50K investment will depend on your stock portfolio’s dividend yield. Here is a table to illustrate what I am saying.

Table 1: Range Of Potential Dividends Earned With $50K Investment

Portfolio Dividend YieldDividends on $50K

With these possibilities in mind for how much you can get in dividends with 50k, please allow me to address some essential questions. Plus, the steps required to maximize your dividend income with the least risk.

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

What Is Portfolio Dividend Yield, And How Is It Calculated?

A stock portfolio’s yield is the weighted average dividend yield of the individual stocks owned.

To calculate your portfolio’s yield, add all the dividend income each stock holding earns for an entire year. Then, divide the result by the total market value of your portfolio.

Here is another table illustrating what I mean by using a five-stock $50,000 dividend portfolio.

Table 2: Example $50,000 Dividend Portfolio Earning $1,800 In Annual Dividend Income

StockValueDividends Per YearDividend Yield

In this dividend portfolio example, $50,000 invested earns $1,800 annually. The portfolio dividend yield is 3.6%, calculated as $1,800 divided by $50,000.

Each stock in the portfolio influences the overall portfolio yield. You can increase your portfolio’s dividend yield by picking higher-yielding dividend stocks. Thus, increasing the amount you can get from dividends with $50K.

This point brings me to some critical questions about dividend yields. Please let me address them next.

What Is A Good Dividend Yield For Your $50K Portfolio?

A good dividend yield is enough to meet your current income needs. But low enough to suggest a  company’s dividend is not at risk.

Admittedly, this is a subjective answer. What may be a good dividend yield for me may not be for you.

To give you an idea, I target stocks with dividend yields between 3%-5%. That’s what I call my dividend yield sweet spot.

Read more about identifying and targeting good dividend yields.

Be Careful With High Dividend Yields When Investing $50K For Dividends

Investing in stocks with higher dividend yields will result in your $50K portfolio earning more dividends. On the surface, that is a good result. Right?

Not so fast because higher dividend yields come with two main tradeoffs. You can read my more in-depth views on high dividend yields. However, let me summarize the big takeaways from the article.

First, higher dividend yields typically indicate that a company’s dividend may be at risk of being reduced. Second, companies with high-yield stocks increase their dividends less frequently and usually in smaller increments. Thus, organic dividend growth is generally lower.

Now you know how much dividends you can earn with $50K and some crucial tips about dividend yield.

Next, I promised a few tips to create a portfolio holding $50,000 in dividend stocks. So, please allow me to cover those points now.

How To Build A $50K Dividend Portfolio From Nothing

Here are six easy steps for investing $50k in dividend stocks.

1. Live On Less And Invest The Rest

Dividend investing rule number one is it takes money to make money.

So, sharpen your pencil and fine-tune your monthly budget. Spend less than you make to create extra investment funds at the month’s end.

2. Choose Your Dividend Stocks

There are several ways to go about selecting your dividend stocks.

1. Pick Your Stocks

Become proficient at analyzing and selecting dividend stocks. Read more about how I analyze dividend stocks for my portfolio.

2. Focus On Kings And Aristocrats

Select from elite dividend growth stocks known as Dividend Kings and Dividend Aristocrats. Kings and Aristocrats are companies with impressive track records of consistently paying and raising their dividends over long periods.

3. Use A Top-Notch But Low-Cost Investment Advisory Service

Use a reputable service for stock analysis and investment ideas. I recommend the Simply Investing Report and Analysis Platform.

4. Choose One Or More Exchange Traded Funds (ETFs)

Choose an exchange-traded fund that buys and holds dividend-paying stocks. Several high-quality dividend ETFs offered by Vanguard include.

  • High Dividend Yield ETF (VYM)
  • Dividend Appreciation ETF (VIG)
  • International High Dividend Yield ETF (VYMI)

Full disclosure: I own VYM and VYMI.

Note that these four approaches to picking dividend stocks are not mutually exclusive. For example, I use all four methods.

3. Invest Money Regularly

Add to your dividend stocks regularly. I recommend doing so in equal amounts every month.

Regularly investing the same amount is known as dollar cost averaging into your dividend stocks. Rather than trying to time the market, your investment will buy more shares when the stock market is down and fewer when prices are high.

To ensure adequate diversification, seek to hold at least five and perhaps 15-20 stocks. On the other hand, one well-chosen dividend ETF may suffice.

4. Reinvest Your Dividends

Your dividends will begin rolling in after you buy your first dividend stock.

Most importantly, I recommend reinvesting all dividends received. By doing so, you will compound your dividend income more quickly.

Read more here about dividend reinvestment and how it works.

5. Monitor Your Portfolio

Invest in high-quality dividend stocks such as Kings and Aristocrats. Or, hit the easy button, and choose an ETF that pays dividends.

Building your $50K dividend portfolio with quality and diversification as top priorities means you need little time to monitor your investments. However, I recommend going through your portfolio holdings at least annually.

First, don’t let any stock become too large, thus, limiting your diversification. Also, check to see if the original reasons you bought the stock are still in place.

6. Continue Your Learning Journey

Finally, keep learning.

Read articles about dividend investing and dividend stocks. Pay attention to your stocks in the media. Stay abreast of what’s going on in the stock market and the economy.

Finally, take a course on dividend investing. I highly recommend this one:

Okay. That completes my six simple steps for creating a $50K dividend portfolio.

Next, I will address one unique situation, then wrap up.

How To Build A $50K Dividend Portfolio When You Have The Money Right Now

I hope you are one of the lucky ones that received an inheritance or somehow came into your $50,000 in one big windfall.

If that’s the case, congratulations.

However, even if you came into your money immediately, you should build your $50,000 dividend portfolio, as I described.

Yes, you can eliminate step #1. But I don’t recommend putting your entire $50K into dividend stocks in one lump sum.

Take advantage of dollar cost averaging and put your money to work in smaller increments over a more extended period. For example, $5,000 per month for ten months. Or $2,500 per month for 20 months.

Doing so will reduce the risk of investing your lump of money right before the stock market falls. Thus, the steps to build your dividend portfolio remain the same.

Okay. That’s all I’ve got for today. Please allow me to share some final thoughts.

How Much Dividends From 50K Investment In Dividend Stocks?

With current dividend yields averaging 3-5% across many stocks and sectors, a well-constructed $50k dividend portfolio can easily generate between $1,500 – $2,500 in annual dividend income.

Furthermore, a $50k portfolio also can provide solid long-term capital growth potential.

Remember to stay diversified, invest regularly in small increments, and reinvest dividends. With the right dividend stocks, $50,000 can generate a passive income stream that makes a big difference in your life.

Finally, good luck with your investments, and if you are hungry for more dividend investing articles, check out my archives of helpful posts about investing in dividend stocks.

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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.

Answering The Question: How Much Can You Make in Dividends with $50k?