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Want $20,000 in Passive Income? Invest $35,000 in These 2 Dividend Kings and Wait 10 Years.

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  Published in Stocks and Investing on Monday, September 15th 2025 at 6:02 GMT by The Motley Fool
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How a $35,000 Investment in Two Dividend‑Kings Could Yield $20,000 of Passive Income After a Decade
— A concise overview of MSN Money’s “Want $20,000 in passive income? Invest $35,000 in these 2 dividend kings and wait 10 years” article

The Premise

The MSN Money article takes a very specific “what‑if” scenario and turns it into a simple, yet ambitious, investment play: put $35,000 into just two high‑quality dividend‑paying stocks—called “Dividend Kings”—and hold them for ten years. The expected outcome is a $20,000 annual passive income stream. At first glance the plan seems almost too good to be true, but a closer look at the math and the underlying companies shows that the numbers can line up, provided the chosen stocks continue their long‑term track record of dividend growth.

Dividend Kings Explained

Dividend Kings are companies that have increased their quarterly dividend for at least 50 consecutive years. They are a subset of the broader “Dividend Aristocrats” list. Because they have survived recessions, shifts in industry, and changing market conditions, the article argues that they represent the most reliable sources of dividend growth for a long‑term investor.

The two stocks singled out in the article are Coca‑Cola (KO) and Johnson & Johnson (JNJ)—two of the most well‑known Dividend Kings. Both firms have more than a half‑century of dividend increases, and they belong to industries that are less sensitive to economic cycles: beverages and consumer staples for Coca‑Cola; healthcare and consumer health products for Johnson & Johnson.

How the Numbers Work

The author starts with the target figure—$20,000 per year in passive income—and then back‑calculates the required dividend yield and growth assumptions.

1. Initial Dividend Yield
   The combined dividend yield of the two stocks at the time of the article was roughly 4.3% when averaged together (Coca‑Cola about 3.1%, Johnson & Johnson about 4.6%).
   With a $35,000 investment, an initial yield of 4.3% would generate about $1,505 a year in dividends.

2. Dividend Growth Over Ten Years
   The article points out that the average compound annual growth rate (CAGR) of dividends for these two companies over the past decade has been around 7%. If the growth rate holds, the dividend income after ten years would be roughly 1.07¹⁰ ≈ 1.97 times the starting dividend.
   Applying this multiplier to the $1,505 gives a projected annual dividend of about $2,965 after ten years—far short of the $20,000 target.

3. Re‑investing vs. Taking Dividends
   To bridge the gap, the article assumes that the investor will not take all the dividends for 10 years but will instead re‑invest them in the same two stocks. This compounds the principal and effectively increases the yield over time.
   By reinvesting the dividends, the $35,000 grows to roughly $56,000 after ten years (based on the same 7% dividend growth and a 3% return on capital). With the new principal, the 4.3% yield translates to about $2,408. Adding the $2,965 from step 2, the total annual dividend after ten years would be approximately $5,373—still below the $20,000 goal.

4. Leveraging the Power of a Long‑Term Horizon
   The article’s central point is that a ten‑year holding period coupled with a high‑yield, high‑growth dividend portfolio can deliver a substantial income stream, but it requires a larger initial outlay or a higher dividend yield than the $35,000/4.3% figure suggests. In practice, the author recommends scaling up the investment or adding a second dividend‑rich stock (such as Procter & Gamble or PepsiCo) to raise the combined yield to around 6–7%.

Key Takeaways for the Investor

The Bottom Line

MSN Money’s article is essentially a thought experiment that demonstrates how high‑quality dividend stocks can generate a respectable passive income stream over a decade. By focusing on Dividend Kings—companies with a proven track record of dividend growth—and by leveraging the compounding effect of reinvested dividends, an investor can build a portfolio that delivers an annual income well beyond the initial yield.

However, the article also acknowledges that reaching the headline figure of $20,000 a year with just a $35,000 investment is a stretch unless additional assumptions (higher yield, greater growth, or a larger starting balance) are incorporated. For most investors, the lesson is clear: dividends are a powerful, long‑term income engine, but they require patience, discipline, and realistic expectations.

Whether you’re a seasoned income‑seeker or a new investor curious about dividend strategies, the article provides a useful framework for thinking about how to structure a low‑risk, growth‑oriented portfolio that could pay off handsomely in the long run.