How Much Dividends Does One Million Dollars Make?

If you’ve been hoping to tap into the power of the stock market to transform your financial future, especially when it comes to passive income opportunities, the odds are pretty good you’ve looked into dividends.

At the same time, lots of folks feel that dividend payouts are pretty useless unless you have tons of money in the bank. Well, we can tell you that this isn’t true – even just $1 million worth of dividend paying stocks can net you between $30,000 and $50,000 in dividend payments alone.

Not bad, right?

What’s even better, though, is that it’s not all that challenging to get to $1 million worth of dividend paying stocks these days if you are smart, strategic, and get a little luck in the market, too.

We dig deeper into that below.

What Exactly Are Dividends?

The overwhelming majority of investors are interested in generating just as much profit as humanly possible while securing (and protecting) their retirement nest egg at the same time.

Most folks are going to be much happier sitting on a smaller stock that pays reliable dividends than chasing the “next big thing” that has the potential to blow up faster than anyone could have imagined.

If you find yourself in that boat, it’s important to make sure that the dividend paying stocks your leveraging have the greatest opportunity to give you passive (and consistent) income while also giving you the opportunity to grow your wealth by leaps and bounds year after year.

You see, the way that dividend paying stocks work is pretty simple and straightforward:

First, you have to purchase a stock that actually pays a dividend on a consistent basis. There are a ton of “blue-chip” stocks out there that make their dividend payments a big part of owning their stock in the first place.

Growth Potential

Secondly, you need to look for stocks that have the potential to grow year after year as well. Loading up on dividend paying stocks for a company that might not be around in 20 years isn’t the smartest move you could make.

Dividend Growth

Finally, it’s never a bad idea to look for stocks that have significant historical dividend growth.

You want to know that your dividend payment today is halfway decent, but that the dividend payout potential in the future is even higher!

Square those things away and you won’t have much to worry about when it comes to locking up and securing your retirement.

How Much Dividends Does One Million Dollars Make?

Now let’s get down to how much in dividends you can expect to make if you have $1 million in dividend paying stocks.

Before we get to that, though, it’s important to let you know that this number is always going to be a bit of a ballpark figure.

Depends On Dividend Percentage

You see, not all stocks pay the same kind of dividend. Some provide a 3% dividend yield, some provide a yield even smaller than that – and some provide yields that are considerably larger.

If you have a stock that pays a 3% dividend yield and you own $1 million of stock, you’re going to be looking at about $30,000 in annual payments.

On the other hand, lets say you have a stock that pays a 5% dividend you could be looking at $50,000. If you have a 7% dividend, you’re looking at $70,000 annually – like clockwork!

Pretty neat, right?

At the end of the day, though, that’s really what you should be thinking about when you control a $1 million dividend paying stock portfolio.

Average out the dividend yield percentage on an annual basis from all the different stocks that you hold, come up with the number (you’re probably going to be looking at between 3% and 5% – on average), and then you’ll know that you can expect tween $30,000 and $50,000 every year from here on out.

That’s a pretty solid chunk of change.

Don’t Forget About Dividend Growth, Though!

Just because you’ve locked up a bunch of stocks ($1 million worth, in our example) that have an average annual return of between 3% and 5% right now doesn’t mean that you’re going to be stuck at between 3% and 5% forever.

No, no.

Truth be told, dividend growth rates (the amount dividend yield percentages grow year after year) historically outpace the rate of inflation – sometimes by quite a bit.

That means you could be looking at generating a legitimately recession proof passive income for the rest of your life, all by leaning on the power of dividend paying stocks.

Now were really talking!

Let’s just say, for the sake of argument, that you currently have a one million-dollar dividend paying stock portfolio that pays a 3.5% average dividend yield.

That means you’d be looking at a passive income from your dividends alone pegged at $35,000.

If, however, in five years that dividend yield rate grew to 5.5% you’d be looking at $55,000 in passive income – without having to buy another single share of stock (or do anything else whatsoever, even).

That’s the trick to funding your truly autopilot retirement income!

Closing Thoughts

So there you have it, now you have a better idea of just how much in dividend income you’ll be able to generate if you have secured $1 million in dividend paying stock.

As we highlighted a moment ago, the average dividend yield (as of today) is between 3% and 5% – give or take a little bit.

That doesn’t mean that you’re going to be stuck with between 3% and 5% forever, though.

Sure, that 3% to 5% dividend yield is going to net you $30,000-$50,000 a year (like clockwork, without any extra work). But there’s a lot of potential for that dividend yield to jump in the future – especially over a decade or two – and you might be looking at dividend payouts north of $70,000 or more in the not too far off future.

Dividend paying stocks are certainly one strategy to go with if you want to be really protect your retirement with passive income potential.

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How Much Dividends Does One Million Dollars Make?