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How much passive income would you get by investing in the TSX index?
It depends on how much you invest. Assuming you invest $543,000 — the average net worth of a Canadian retiree over the age of 65 — you get $16,072 per year. That is, $543,000 multiplied by 2.96% — the dividend yield on a typical TSX index fund.
It’s not an insignificant amount of money, but you can do better. If you invest in higher-than-average yielding dividend stocks, you can get $24,000 per year with $543,000 invested. Technically, you can get as much as $81,450 per year with such investments. That’s the dividend income generated by investing $543,000 at a 15% yield — typical of the highest-yielding junk bond funds. However, such funds are extremely risky. 4-5% is the highest portfolio yield you can get when investing in a portfolio of “sensible” Canadian stocks. In this article, I will explore one stock that can make…
