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The concept of creating passive income starting with absolutely nothing might sound like an impossible dream. However, with the right strategies and a commitment to financial growth, building a stream of passive income is within reach for anyone. In this article, we’ll explore a step-by-step approach to generating passive income, starting from scratch.
Finding the side hustle for you
The journey to passive income often begins with a side hustle. A side hustle is a part-time job or gig that can help you generate extra income outside of your regular job. Yet it doesn’t need to be a difficult one. One excellent example is renting out a parking spot. If you have an extra parking space or access to one, you can turn it into a monthly revenue stream.
For instance, if you live in a bustling urban area with high demand for parking spaces, you could potentially rent out a parking spot for $300 per month. That creates $3,600 per year! This is an excellent way to get started on your path to passive income, as it requires minimal effort beyond the initial setup.
Transition to dividend stocks
While renting out a parking spot is a great way to start earning some passive income, it’s not the ultimate goal. To truly build wealth over time, you should consider investing in dividend stocks.
Dividend stocks are shares of companies that pay out a portion of their earnings to shareholders in the form of dividends. These dividends can provide you with a steady stream of passive income, and if you reinvest those dividends, your investments can grow significantly over time.
Let’s delve deeper into this concept with a real-life example. Consider Nutrien (TSX:NTR), a global provider of agriculture products and services. Nutrien stock has a strong track record of paying dividends and is a solid candidate for creating passive income.
Nutrien stock, a case study
Over the last five years, Nutrien stock has shown impressive growth. In September 2018, the stock was trading at around $68 per share. It then shot up to $141, before coming back down to around $80 per share today. This growth is indicative of Nutrien’s strength in the agriculture sector.
But the real appeal of Nutrien stock for passive income investors lies in its dividends. Nutrien stock consistently pays a quarterly dividend, with a payout of $2.86 per share per year as of my last update. So, how can you create passive income with Nutrien stock?
Let’s assume you start with $3,600, the equivalent of purchasing 45 shares of Nutrien at $79 per share. With a dividend of $2.86 per share, you can calculate your annual dividend income as follows: this would create $128.70 in annual passive income.
This means that by investing $3,600 in Nutrien stock, you can generate approximately $128.70 in passive income annually from dividends alone. Moreover, Nutrien has a history of increasing its dividend over time, potentially leading to even greater passive income in the future.
As you embark on your journey to create passive income, it’s crucial to consider the future outlook of your investments. Nutrien, for instance, operates in the essential agriculture sector, which is expected to remain resilient and in demand. As the global population continues to grow, the need for agricultural products and services is likely to increase, benefiting companies like Nutrien.
In conclusion, creating passive income starting with $0 is an achievable goal with the right strategies. Begin by finding a side hustle, such as renting out a parking spot, to generate some initial income. Then, transition into investing in dividend stocks like Nutrien, which offers the potential for both dividend income and capital appreciation. By making informed investment decisions and maintaining a long-term perspective, you can steadily grow your passive income and work towards financial freedom.