Search for ‘easy ways to make money’ on Google and you’ll find no shortage of advice on how to make a little bit of extra cash. The problem is though, most of the solutions offered up are actually quite a hassle.
For example, you can take surveys and get paid a fiver here and there, but these often take a lot of time to complete. Similarly, you could start a website, but this can take a lot of effort to actually monetise. Even selling things you don’t need on eBay requires time and effort, and the juice isn’t always worth the squeeze.
However, there’s one simple way of making extra money that literally requires zero work. With the strategy I’m referring to, you can pocket cash payments while you’re watching TV, lying on the beach, or even while you’re asleep. It really is an extraordinarily easy way of making money and almost anyone can do it. Read on to find out more…
Extra money with zero effort
The money-making strategy I’m talking about is dividend stock investing. Dividend stocks are a certain type of stock which pay out a proportion of the underlying company’s profits, in cash, to investors on a regular basis.
These cash payments are known as dividends. For doing nothing more than owning the stock, you receive cash payments into your account several times per year, because you’re considered a part-owner of the company.
How much can you make?
How much money you’ll receive in dividends from a particular stock depends on its dividend ‘yield’. This is a similar concept to the interest rate on a savings account. In other words, if a stock has a dividend yield of 5% and you invest £1,000, you’ll pick up a cash payment of £50 (£1,000 x 5% = £50) every year for doing nothing. The more you invest, the more money you can pick up in dividends.
In terms of choosing which individual dividend stocks to buy, you don’t have to look too far to spot attractive opportunities as some of the UK’s most well-known companies offer brilliant dividend yields right now. For example, oil giant Royal Dutch Shell currently offers a yield of 5.9% while Lloyds Bank offers a yield of 5.5%.
A proven strategy
I’ll point out that this strategy is not some crazy ‘pie-in-the-sky’ scheme. It’s a proven passive income strategy that thousands of investors across the UK use to generate extra cash.
I’m a dividend stock investor myself and have picked up 12 cash payments in just over six weeks. A lot of my Fool colleagues are also keen dividend stock investors. With UK-listed stocks paying out nearly £100bn in dividends last year alone, I think you’d be mad not to get involved.
Of course, like any financial strategy, there are risks associated with dividend stock investing. Stock prices constantly move up and down, meaning you may not get back what you invest. Dividends are also not guaranteed.
However, overall, I think the risk-to-reward ratio is extremely attractive. Dividend stock investing really is an easy way to make extra money.
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Edward Sheldon owns shares in Royal Dutch Shell and Lloyds Banking Group. The Motley Fool UK has recommended Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.