# What if you could turn your annual income into passive, dividend income..

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Passive income is one of the most satisfying and life changing ways to earn an income as it can provide more free time and independence in your lifestyle.

There are various ways to generate passive income, but one particular way most probably requires the least amount of initial “work” and maintenance to get some passive income rolling in.

And that method is the receiving of dividend payments from holding stocks in a company, typically listed on the stock market.

The dividend amount you earn will usually depend on the amount of stocks you own and also the company’s financial situation.

For example, if the Company is not making profits, then they simple will not have money to pay to its shareholders as the dividends are distributed from any profits.

Here’s how to roughly work out how much you would need to invest to earn a certain amount of dividend income from your investments.

First determine how much you would like to earn as your annual income, for example, \$60,000 per year.

Second, you need to do some research and find good, established dividend paying companies to invest in.

Third, find out what the dividend yield for the stock is, this would be stated in a percentage number.

The dividend yield is the % percentage amount of dividends the Company may make annually.

The dividend yield is calculated as follows:

Dividend per share annually, divided by the stocks share price.

For example, if the company pays \$0.50 per share, and the stock price is \$100, we can divide \$1 by the current stock price to get the dividend yield in percent.

The calculation would be 1/ \$100 = 0.01

0.01 = 1% dividend yield.

For example if in 2022, Apple’s dividend yield was 0.55%

So we need the 2 numbers…

1. How much would you like in dividend income annually.
2. The dividend yield of a Company’s stock you’d like to invest in.

Now that we have the 2 figures we can now calculate how much we need to invest to earn our required amount of dividend annually.

The formula is as follows:

Your required annual income / dividend yield of the Company.

So let’s say for example,

1. You would like to earn \$60,000 per year in dividends from Apple.
2. Apple’s dividend yield is 0.55%.

\$60,000 / 0.0056 = \$10,714,285.70!

In this scenario, you would need to invest \$10,714,285.70 in Apple stocks in order to earn your required amount of dividends, which was \$60,000 per year.

Ok, that was just an example and Apple are known to pay less in dividends in comparisons to other companies, which may pay higher dividend yields.

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