Who wants $ 10,000 in passive income? It is possible with 3,164 shares in this dividend stock

Who wants $ 10,000 in passive income? It is possible with 3,164 shares in this dividend stock

Earning passive income is a valuable endeavor. Without passive income, you have to work for your money. With passive income, money works for you. It also gives you the freedom to choose whether you want to continue working or make a living from the income the investment generates.

The benefits of passive income are actually too many to mention all of them. One of the best ways to generate passive income is with dividend stocks. If your goal is to earn $ 10,000 in passive income annually, you can achieve it by owning 3,164 shares in the popular department store chain Goal (WKN: 856243, -3.16%) buyer. Let’s break down the details and what can happen to the $ 10,000 in passive income in the coming years.

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Almost tripled since 2013

If you buy 3,164 shares of Target, you will earn $ 10,000 in passive income, but that’s just the beginning. This amount is likely to increase over the years. Consider that Target increased its dividend per. share from $ 1.32 to $ 3.16 between 2013 and 2022. This means that income investors who bought enough Target shares for $ 10,000 in passive income in 2013 now earn $ 23,940 annually.

The reason for Target’s ability to pay dividends is its solid earnings. Target has grown its earnings per. share by 12.7% annually over the past decade. The only sustainable source of dividend payments is profit. As such, Target’s solid earnings growth should attract investors looking for passive income.

DIMENSIONS, EPS DILUTED (ANNUALLY), DATA OF YCHARTS

In addition, Target’s management has made prudent capital investments in recent years, which have yielded decent returns. The company has invested in building a superior omnichannel shopping experience that customers love. In addition to traditional online home delivery, customers can pick up their order at a Target store or wait in the parking lot for a colleague to deliver it to their car.

Another metric that emphasizes the sustainability of Target’s dividend payment is its payout ratio. This metric, which measures the percentage of earnings paid as dividends, stands at 28%. The lower the ratio, the more leeway a company has to pay its dividends as dividends fluctuate.

MEASUREMENT PAYMENT RATIO, DATA OF YCHARTS

A reasonable price for investors with passive income

DIMENSIONS P / E, DATA BY YCHARTS

Target trades at a price-to-earnings multiple of 13 and a price-to-sell multiple of 0.7. According to these measurements, the stock is cheaply valued relative to its historical average. Investors who want to build up $ 10,000 in passive income pay a reasonable price to reach this goal with Target shares.

Passive income investors have several reasons to buy Target shares. Buying 3,164 shares in Target obviously requires a significant investment. $ 484,092 to be exact. But it is an excellent way to turn a one-time payment into a recurring stream of passive income that can last for a very long time.

Our best stock for 2022

There’s a company whose name gets a lot of buzz from analysts at The Motley Fool these days. It’s for us THE BEST INVESTMENT FOR 2022.

You could also benefit from it. To do this, you must first know all about this unique business. So now we have one free special report prepared, which introduces this company in detail.

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This article was written by Parkev Tatevosian and was published on Fool.com on 13/6/2022. It has been translated so that our German readers can participate in the discussion. Parkev Tatevosian does not own any of the listed shares. The Motley Fool owns shares in and recommends Target.

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