This Dividend ETF Could Generate $1,000 per Month in Passive Income. Here's How.
Key PointsThe Vanguard High Dividend Yield ETF targets stocks with above-average yields.
Generating $1,000 in passive monthly income through dividends doesn't necessitate picking individual stocks or pursuing high-risk investments. The Vanguard High Dividend Yield ETF (VYM) is a sensible choice to achieve this goal. Its yield of 2.3% might seem modest, but the fund's diversified, low-risk portfolio is ideal for long-term income investors.
The ETF's strategy is straightforward. It begins with a list of large dividend-paying stocks and selects the top half based on forecasted dividend yield. Nearly 600 stocks make the cut, which are then weighted by market cap. At its current yield of 2.3%, achieving $1,000 in monthly income (or $12,000 annually) would require an investment of around $522,000. With VYM trading at approximately $165 per share, this equates to roughly 3,160 shares.
For those who don't have half a million dollars in their brokerage account, the simplest approach is to invest regularly and reinvest every dividend received. This gradual method allows you to stay consistent, accumulate shares irrespective of market conditions, and build wealth over time. While it may take years to reach the goal, focusing on the long-term objective is crucial. Investing wisely, with The Motley Fool's premium services, can guide you on the right path.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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