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Want $500 a Month in Dividends? Here's How Much You'd Need to Invest to Get There.
Key Points
The Schwab U.S. Dividend Equity ETF (SCHD) is known for holding quality companies because of its screening process.
SCHD has averaged a 3.5% dividend yield over the past three years.
Most investors will need to invest consistently in SCHD over time to reach $500 in monthly dividends.
An extra $500 a month could help a lot of people. An extra $500 without having to do extra work could really help a lot of people. In the stock market, it can happen with a quality dividend ETF like the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD).
SCHD routinely has one of the higher yields among dividend ETFs. The exact amount you need to invest to earn $500 in monthly dividends ($1,500 each of its quarterly payouts) will vary based on yields at the time, but here is how the math could play out based on various yields and a recent closing price of $36.21 on Nov. 4:
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| Dividend Yield | Shares Needed | Investment Needed |
|---|---|---|
| 2.9% (current) | 5,714 | $208,897 |
| 3.2% (midpoint between current and 3-year average) | 5,178 | $187,500 |
| 3.5% (3-year average) | 4,734 | $171,429 |
Table by author based on recent $36.21 share price of SCHD.
Most investors won't be able to dump a lump sum into SCHD to hit the $500 monthly mark instantly, but it's doable by investing consistently over time.
One of SCHD's key strengths is its screening criteria for choosing companies to include in the fund. A company must have 10 consecutive years of dividend payments, five consecutive years of dividend increases, and be in a strong overall financial position. These guardrails help ensure the fund holds only quality, shareholder-friendly companies, so you don't have to overthink it. You can set it and forget it.
Stefon Walters has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.