This article outlines a straightforward investment strategy aimed at generating monthly dividend income, specifically targeting a minimum of $1 per month. That amount looks so insignificant right? I know. But it is meant to simplify the investment strategy such that if well understood, the model can be scaled to any amount desired.
By defining investment goals, selecting appropriate ETFs, determining investment amounts, and utilizing zero-fee platforms, investors can create a sustainable income stream that grows over time. The strategy emphasizes a hands-off approach with a focus on biotech and business development sectors, ensuring a balanced and diversified portfolio. There are host of other sectors to choose from but there are chosen for illustration purpose.
Step 1: Define Your Investment Goals
Before selecting ETFs, let’s clarify your objectives:
- ✅ Primary goal: Passive income through dividends
- ✅ Risk tolerance: Likely moderate (since dividend ETFs are generally stable)
- ✅ Time horizon: Long-term (5+ years for compounding)
Step 2: Choosing ETFs for Monthly Income
We need ETFs that pay monthly dividends, have good yield, and low management fees (MERs). Here’s a diversified mix:
A. Core Monthly Dividend ETFs (Canadian)
| ETF | Yield | MER | Why Choose It? |
| BMO Monthly Income ETF(ZMI) | 4.0% | 0.21% | Balanced mix of stocks and bonds |
| iShares Canadian Select Dividend ETF(XDV) | 4.1% | 0.55% | Focus on top Canadian dividend stocks |
| BMO Canadian Dividend | 4.5% | 0.39% | Higher-yielding Canadian |
- Best pick for stable monthly income: ZMI
- Best pick for higher yield: ZDV
Step 3: How Much to Invest?
To earn at least $1 CAD in monthly dividends from an ETF in Canada, let’s break this down:
Determine Investment Needed
Dividends are usually paid quarterly, but some ETFs offer monthly distributions. To find how much you need to invest, use this formula:
{Investment Required} = {Monthly Dividend Goal}/{Dividend Yield}}
x 12
Assuming a typical Canadian dividend ETF with a 4% annual yield, the required investment would be:
{1x 12}/{0.04} = 300 CAD
This means you need to invest $300 CAD in a 4% dividend yield ETF to earn $1 per month in dividends. If the yield is lower, you’d need to invest more.
We already calculated that you need $300 CAD in a 4% yield ETF to get $1/month. Now, let’s scale up:
| Monthly Goal | Annual Dividend Needed | Investment Needed (4% Yield) |
| 1 CAD | 12 CAD | 300 CAD |
| 10 CAD | 120 CAD | 3000 CAD |
| 50 CAD | 600 CAD | 15000 CAD |
| 500 CAD | 1200 CAD | 30000 CAD |
- Open a Wealthsimple Trade or Questrade account
- Buy ZMI or ZDV ETF
- Invest at least $300 CAD for $1/month in dividends
- Reinvest dividends for long-term growth
- Add more funds monthly
You can start small and dollar-cost average (DCA) over time.
Step 4: Where to Invest? (Zero-Fee Platforms)
To avoid trading fees, use:
- Wealthsimple Trade (Best for beginners, no commission)
- Questrade (Free to buy ETFs, small sell fee)
Step 5: Growing Your Investment Over Time
- Start small – Begin with $300+ in ZDV or ZMI
- Reinvest dividends – Use DRIP (Dividend Reinvestment Plan)
- Add more monthly – Even $100/month compounds over time
- Diversify later – Consider U.S. dividend ETFs like VYM for growth
Wrapping it up: Simple Monthly Plan
- Open a Wealthsimple Trade or Questrade account
- Buy ZMI or ZDV ETF
- Invest at least $300 CAD for $1/month in dividends
- Reinvest dividends for long-term growth
- Add more funds monthly
Leave a Reply