Buy 60 Shares in This Top Dividend Stock for $870.40 in Passive Income

Canadian Dollars

A dividend stock is great if you’re looking for passive income. That cannot be denied. But it’s not everything that investors should be looking for. Instead, it’s just a piece of the puzzle. That puzzle involves both passive income from dividends as well as returns.

But there’s a major benefit of picking up a dividend stock, and that’s having the ability to reinvest that income again and again over the years. Even so, if you’re looking for passive income pretty much immediately, I’ve got you covered. So, here’s how much you can invest to create major passive income in the next year.

First, choose the right stock

If you’re going to pick up a dividend stock for a major win, you want a company that’s proven to be valuable long term, and offering value right now. The Canadian banks are a great place to look for this right now — Toronto Dominion Bank (TSX:TD) in particular.

TD stock has the advantage of major exposure to the United States. It’s one of the top 10 banks in the country, after all. Because of this, when an economy rebounds, the U.S. tends to recover before the rest. This allows for the potential to see major gains in the near future.

What’s more, TD stock is quite valuable at the moment. TD stock trades at just 10.78 times earnings, with shares down 8.4% in the last year. What’s more, it holds a 4.61% dividend yield. That yield is higher than its 4.07% average yield over the last five years.

Think long term

Granted, TD stock is down right now. There are other stocks that are up on the TSX today, but none that are practically a sure thing. After all, the Canadian banks have plenty of cash on hand, creating provisions for loan losses. While TD stock may be burning through it during a downturn, those provisions allow for major growth coming out of any economic downturn.

You can see that over not just the last few years, but decades! When the market becomes strong, banks become strong. And TD stock is no exception. In fact, over the last 20 years alone, shares have climbed an incredible 493%! That’s major growth even as shares are down, with even more expected in the future.

So, if you’re looking for growth, stability, and dividends, TD stock is a great option. Now, let’s see how much you’d need to invest to create some absurd income.

Passive income coming in

If you’re looking for both returns and dividends, then TD stock is a great buy. Let’s say you have $5,000 that you want to invest in the TSX today. Again, banks are a great option to see some major growth in that time.

So, here is how much that $5,000 could create in the next year, with TD stock reaching 52-week highs once more and dividend income included.

Now, you’ve created returns of $640 and dividend income of $230.40. Together, that’s $870.40 in passive income! And, honestly, that’s likely conservative. TD stock should surge even past these heights as we enter a bull market once more.

Should You Invest $1,000 In TD Bank?

Before you consider TD Bank, you’ll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in November 2023… and TD Bank wasn’t on the list.

The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 24 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks

* Returns as of 11/14/23

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Fool contributor Amy Legate-Wolfe has positions in Toronto-Dominion Bank. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.