Passive income depends on cash flow. If you can generate enough cash every month to meet your living expenses, you’re financially liberated. However, most passive income strategies require too much capital or too much risk. An ultra-high-yield dividend stock is unreliable, while a blue-chip dividend stock needs millions in upfront capital to generate adequate passive income.
For most investors, neither strategy is ideal. Fortunately, there are other ways to boost your monthly cash flow that require a little research and planning. Here are the top two strategies I believe could help an ordinary investor generate $475 in tax-free monthly passive income. Dividend growth
Most investors focus on the dividend yield. However, investing is about making forecasts and taking calculated guesses about future performance. If the company you pick is set for a slowdown or earnings decline, the dividend yield is likely to be cut. We’ve seen this before with commercial real estate investment trusts and energy companies during the crisis in 2020.
In contrast, if your company is likely to see a windfall or upswing, the dividend yield could be deceptively low. We saw this with banks recently that announced 10% to 20% boosts to their dividends after regulators lifted restrictions last year.
In 2022, I believe energy companies could be in a similar position. Enbridge (TSX:ENB) (NYSE:ENB) is an example. The stock offers a 6.3% dividend yield. However, I think that yield is deceptively low. That’s because the price of oil and gas has accelerated by double-digits over the past few months. Some experts believe we could hit $100 soon and keep rising beyond that level. That gives Enbridge enough room to boost dividends or declare a special dividend.
The company has a track record of annual dividend growth. From 2018 to 2021, the dividend payout amount has expanded by 8% […]
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