Written by Amy Legate-Wolfe at The Motley Fool Canada

Many of us are on the hunt for passive income these days. We’re looking for the best deal on the best dividend. And that’s fine! But it’s important to take into consideration all the factors when seeking out passive income.

While dividend income is great, investors must also consider that returns are another form of passive income. After all, passive income is income you make by doing anything else! Whether that’s driving, eating, or sleeping, you’ll still be bringing in passive income if invested properly.

So, let’s invest properly! Here is how to create the ultimate amount of passive income in 2024.

Contribute consistently

First off, make sure you’re able to contribute to your investment account on a consistent basis. I say investment account, but really, you should have something like a Tax-Free Savings Account (TFSA). That way, you won’t be subject to capital gains and can take out your returns and passive income whenever you like.

To make this consistent, first create a budget. See how much you can comfortably put aside from your paycheque each and every month. Then, set up automated contributions to your TFSA! That way, you never have to remember or even think about contributing to your TFSA. It’ll just be done for you.

Just make sure you’re always staying within the contribution limit for your TFSA. This can be found through your bank, online through the Canada Revenue Agency (CRA), or by calling them directly.

Consider dollar-cost averaging

Dollar-cost averaging is a great way for investors who are looking to contribute regularly to see long-term gains. Furthermore, it’s great for investors who don’t have time to look into stocks constantly but want to invest regularly.

By using this method, you’ll invest the same amount at the same time every month, no matter what. Over time, the cost of your investment will average out. Sometimes you’ll buy shares lower. Other times, they’ll be higher. But over time, your shares will only increase higher and higher.

That’s especially true if you get into dividend stocks, which brings me to the last point: reinvestment.

Reinvest again and again

The best way you can increase your portfolio over time is by using what your investments give you. Dividend income, in particular, is a great way for you to use the income from these companies to reinvest right back into the stock.

Let’s say you pick up a company such as Brookfield Renewable Partners (TSX:BEP.UN). The company is a steal right now. That’s because higher interest rates and inflation have created higher costs while the market has lowered its fair value. Yet even just a small investment can create massive passive income from this dividend stock.