Achi news desk-
Canadians looking to create passive income in 2024 probably already know that investing is the easiest and arguably the most successful way to create passive income. Not just this year, but in the long term as well.
Investors will earn passive income not only from dividend income, but also from earnings. With that in mind, let’s look at what investors should consider, dividend stocks to buy, and how much you could create in passive income in 2024.
What to consider
When investors are looking for a strong dividend stock for long-term passive income, there are several factors to consider. The first is of course the dividend yield. Look for stocks that have relatively high dividend yields, but don’t also high This can mean that the dividend is unstable and there could be fundamental problems. Then, look at the company’s history of paying dividends. A history of increasing dividends annually and even during difficult times can mean that the companies are financially strong.
From there, look at the company’s payout ratio. A lower ratio means the company may have room to increase its dividends, even during a downturn. Furthermore, consider the financial health of the company. Look at its balance sheet, cash flow, and debt levels. You are looking for stability and growth, yet even in difficult times.
From there, look to the future. How is the industry going to grow in the future? Dividends can provide passive income, but the company should also show growth potential. So look for companies with a competitive advantage, a strong market position, and the potential for earnings growth. Furthermore, companies that diversify offer growth in various sectors to reduce overall risk.
A dividend stock to consider
When looking at passive income stocks that might tick all the boxes, financial institutions and specifically Canadian banks can be some of the best places to look. But for one dividend stock that offers a bargain as well as long-term passive income, I’d consider Bank of Nova Scotia (TSX:BNS).
BNS, better known as Scotiabank, is one of the largest banks in Canada and a leading financial institution across North America. The company has a stable and reliable history dating back over 185 years. It has survived financial crises, including this one, through a diverse business model. It carries out operations ranging from retail banking to wealth management, as well as international banking. This has supported a diverse range of revenue streams, resulting in consistent earnings and dividends.
What’s more, the company has a strong track record of financial performance, with more growth to come. This includes from its international operations in Latin America and the Caribbean. So, this growth in emerging markets could be huge for long-term investors.
How much could you get
If you’re now looking to create strong passive income, let’s consider Scotiabank stock and how it adds up. The company offers a dividend yield of 6.27%, with shares still down from record highs. If the bank reached those levels, it would mean a potential advantage of 24% in terms of writing!
On top of that, you can add that dividend yield as well, which currently has a strong payout ratio of 69%. Now, it’s usually recommended that you invest around 10% of your paycheck every month. If you make $60,000, that would mean investing $500 toward this stock every month if you can afford it. That’s a total of $6,000. So let’s see what that might bring in during 2024.
| COMPANY | LATEST PRICE | NUMBER OF SHARES | DAMAGE | TOTAL PAYMENT | FREQUENCY | TOTAL PORTFOLIO |
| BNS – now | $67 | 90 | $4.24 | $381.60 | quarterly | $6,000 |
| BNS – highlights | $83 | 90 | $4.24 | $381.60 | quarterly | $7,470 |
You have now generated $1,470 in returns and $381.60 in dividend income. That’s a total passive income of $1,851.60 in 2024 alone!
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