Wouldn't it be nice to earn $50,000 each year for doing nothing!
One way you could potentially make this a reality is by investing in ASX shares which pay dividends to their shareholders.
How can you earn $50,000 in dividends?
If you already have a hefty sum of money in your bank account then you're half way there.
For example, you can earn $50,000 in income each year from dividend favourites such as Suncorp Group Ltd (ASX: SUN) and Westpac Banking Corp (ASX: WBC) by investing approximately $925,000 and $730,000, respectively, into their shares.
However, very few people are lucky enough to have a spare $730,000 sitting in a bank account, so this simply isn't feasible unless you win the next Tabcorp Holdings Limited (ASX: TAH) lottery.
How else can you do this?
There is another way to achieve this, but it requires both time and patience.
Ten years ago you could have bought Credit Corp Group Limited (ASX: CCP) shares for just $1.12.
Earlier this year the receivables management company declared a fully franked interim dividend of 36 cents per share, bringing its 12 month trailing dividend to a total of 72 cents per share.
This means that if you had bought Credit Corp's shares ten years ago, you'd have a yield on cost (the dividend yield on the price you paid for the shares) of 64.2% today. Which means that an investment of just under $78,000 a decade ago would now yield $50,000 in dividends.
It is also worth noting that with its share price now trading at $23.67, you'd have made considerable capital gains as well. Including its dividends, Credit Corp's shares have generated an average total return of 38.7% per annum over the period.
This level of return would have turned that $78,000 investment ten years ago into an enormous $2,055,224 today.
Whilst very few shares on the Australian share market will generate returns of this level, I believe there are some that could prove to be very rewarding investments over the next decade, the key is finding them early and sticking with them.
