I'm sure most readers would love to earn $50,000 each year for doing nothing.
Well, there is a way to potentially do this – dividend shares.
How can you earn $50,000 in dividends?
If you already have a large sum of money sitting in your savings account then you're half way there to achieving it.
This is because you can earn $50,000 in income each year from the likes of Australia and New Zealand Banking Group (ASX: ANZ) and Aventus Group (ASX: AVN) by investing approximately $870,000 and $724,000, respectively, into their shares.
However, not everybody is lucky enough to have a spare $724,000 or $870,000 sitting in a bank account, so this strategy won't work for everybody.
How else can you achieve this?
But there is another way to achieve this if you have both time and patience.
If you can find a dividend-paying share with strong long-term growth potential, then a much smaller investment could be required to eventually generate $50,000 in dividends each year.
Transurban Group (ASX: TCL) is a good example of this. If you had bought the toll road operator's shares 10 years ago at approximately $3.60, you'd be earning a yield on cost (the dividend yield on your original purchase price) of 16.4% this year.
That means an investment of ~$300,000 ten years ago would be paying out $50,000 in dividends this year.
Furthermore, the appreciation of its share price over the period would have grown your original $300,000 investment into almost $1.3 million today.
So not only are you earning $50,000 of income each year now, you're also up a cool $1 million.
What if you don't have $300,000?
However, $300,000 is still a lot of money. But don't worry, because if you can find the next Breville Group Ltd (ASX: BRG) you will need significantly less to invest.
Around 10 years ago you could pick up Breville shares for ~85 cents. Today the appliance maker's shares are trading at $18.95 and are expected to pay out a 36.3 cents per share fully franked dividend this year.
This means that a ~$115,000 investment 10 years ago would be generating $50,000 in dividends this year. Oh, and your original investment would now be worth over $2.5 million.
