Disclosure: SmartFolio is ours. The advice works with any app, or with pen and paper.
In short
Multiply the monthly income you want by 12, then divide by the dividend yield. At a 4% yield, $1,000 a month ($12,000 a year) needs about $300,000 invested; at 3% it’s $400,000, and at 5% it’s $240,000 — before any tax.
- Amount needed = monthly income × 12 ÷ yield.
- Every point of yield changes the answer by a lot.
- A higher yield isn’t automatically safer income.
The formula
Amount to invest = Monthly income × 12 ÷ Dividend yield
Write the yield as a decimal: 4% is 0.04. So $1,000 × 12 = $12,000 a year, and $12,000 ÷ 0.04 = $300,000.
If you’re not sure what a yield is or how to find it, start with how to calculate dividend yield.
How much for $500, $1,000, $2,000 or $5,000 a month
| Monthly income | At 3% yield | At 4% yield | At 5% yield |
|---|---|---|---|
| $500 | $200,000 | $150,000 | $120,000 |
| $1,000 | $400,000 | $300,000 | $240,000 |
| $2,000 | $800,000 | $600,000 | $480,000 |
| $5,000 | $2,000,000 | $1,500,000 | $1,200,000 |
These are pre-tax figures. The yield you actually get depends on what you own, and it moves as prices and dividends change.
Why chasing a higher yield is risky
The table makes a 7% or 9% yield look tempting: less money for the same income. But yield rises when a price falls, and a price often falls because the market expects a dividend cut. If the cut comes, both your income and your capital shrink.
Many dividend investors look at whether a company’s earnings comfortably cover the dividend, and spread income across many holdings so one cut doesn’t hurt much. That’s general education, not a recommendation for you.
Don’t forget tax and withholding
How dividends are taxed depends on the account and where you live. In Canada, US dividends held in a TFSA usually lose 15% to US withholding tax that can’t be recovered, which means you need more invested for the same income. Put a withholding or tax percentage into the calculator below to see the difference, and check the details for your own situation.
Getting there
Few people buy $300,000 of dividend stocks at once. The usual path is adding money regularly and letting dividends add up over years, with reinvested dividends buying more shares along the way. Tracking your expected income each month shows how close you are, which keeps the goal concrete.
Dividend income calculator
Example numbers only — yields change and dividends can be cut. Not financial advice. Nothing you type leaves this page.
Track your dividend income with SmartFolio
- Import your holdings. From 19 brokers or any CSV or Excel file — your full history or just today’s positions.
- Open Income. Dividends and interest by month, by year and by stock.
- See the next 12 months. An estimate of what your current holdings should pay, with yield and yield on cost.
- Watch the gap close. Compare that estimate with your monthly target as you add money — no spreadsheet to update.
SmartFolio is a tracker, not financial advice. It’s free, with no account and no ads, and every number is worked out on your device.
Common questions
How much do I need to invest to make $1,000 a month in dividends?
About $300,000 at a 4% yield, $400,000 at 3% or $240,000 at 5%, before tax. The formula is $1,000 × 12 ÷ yield.
How much do I need to invest to make $500 a month in dividends?
About $150,000 at a 4% yield, or $200,000 at 3%.
Is it realistic to live off dividends?
It takes a large portfolio, and dividends can be cut, so many people combine dividends with other income or savings. It’s worth getting advice for your own situation.
What app shows my expected dividend income?
SmartFolio estimates the next 12 months of dividends from what you hold now, free.
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