How to create $1000+/month passive income from stocks

Have I told you that one of my greatest and favorite stuff in the world is receiving passive income?

  • dividends from businesses I own
  • dividends from dividend stocks such as REITs
  • dividends from crypto investments / staking
  • rental income

Wherever it comes from, it’s STILL DELICIOUS lol.

Anyhoo, there are 2 general ways to create this form of passive income.

  1. One, is the way I mentioned above: buy or build specific assets that pays me like clockwork OR
  2. Buy stocks that appreciate in value and then sell % of the appreciation at specific intervals

I like #1 better, simply because it’s more passive (yes, I like it convenient and easy that way) — the dividends go straight into my bank account. No need to open my brokerage account, select specific stocks and amount to sell.

In this article, I’m looking specificly at dividend stock investing. Dividend stocks are public listed companies that prioritize paying out a portion of their profits every single year

Go back to fundamentals

I’ll repeat this concept again and again and again: fundamentals are foundational stuff. Questions to go through when you go through selection of dividend stocks are:

  1. Is the business profitable?
  2. Do you expect they will be around in 10 years?
  3. Does this new sale price reflect a more accurate value of the stock?
  4. Are their dividends sustainable?

Is the business profitable?

Go to the company’s profit and loss statements where you can see clearly if they’re making profits or not. Because these company stocks are public listed, all the information is available for free.

They need to be

  1. profitable
  2. sustained profitable amount year on year for last 5 years at least

Do you expect they will be around in 10 years?

These is more of a general sense and decision making. Ask yourself if you think they’d be around in 10 years time or if they’d go obsolete? Companies that cannot grow or pivot such as Nokia, Kodak, Blockbuster. They didn’t adapt or change, so they were phased out.

Is the company you’re gonna invest for dividends in, gonna be around for 10 years or more?

Think about their business model, such as

  • Consumerism: Coca cola / Pepsi
  • Real estate investment trusts / real estate
  • etc

If yes, then you can consider

Does this new sale price reflect a more accurate value of the stock?

The market, or we can name him “Mr Market”, can be moody, with lots of mood swings. And sometimes it doesnt make sense, we’d think bad news, price of shares goes down, but sometimes it goes up. Sometimes with good news, price goes down. Who know how to anticipate that?

However, after looking at their past profitability level and if they may last more than 10 years, another way to go is to dive into their books and look for this thing called NAV and PTB, which means Net Asset Value and Price to Book. Simply means, other than the company generating revenue through it’s operations and business, we go with “just” their asset.

Say a company has $10M in assets, and the price to book should reflect at least their asset value. This hadnt factored in their revenue and profit generation activities…and sometimes (pay attention to this), the market moves so weird that

The price of a share is LESS than their net asset value and profit.

Here is what I call discounted or sales on share prices, especially when the company is a well known, good or have been performing for the last 5+ years. Hey, I did say sometimes the market does what the market does, even when the company didnt do anything different or bad or even good.

Invest regularly (dont time the market)

I’m dumb, so I try my best to NOT time the market.

I just go through the selection like I wrote about above, and every month, I have X amount of dollars to invest (usually 20% of all income goes into investment), and this X dollars is split equally into all my dividend stocks.

That’s it folks, nothing sexy to see, just invest and work/live/play on.

Until I hit my dividend goal, then I keep going. In fact, I’d also reinvest 20% of my dividends too (gotta keep it consistent).

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