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Passive Income: 3 Ways to Build Your Empire in 2020

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Last year, I’d discussed why building passive income was a fantastic luxury for investors. Income vehicles that were reliable in the past, like high-interest savings accounts and GICs, often fail to keep up with inflation in the current low interest rate environment. We are going to turn to other methods in this article, several of which proved to be highly reliable sources of investment income in the 2010s. Let’s jump in.

Buy high-yield dividend stocks

With high-yield dividend stocks, investors can collect great income on a consistent basis while being able to ease their minds when it comes to the ups and downs in the market. In the spring of 2019, I’d discussed how investors can gobble up hundreds of dollars a month in dividends by targeting the right equities.

Investors who are chasing high-yield dividend stocks should consider Fiera Capital. Its shares have climbed 12% year over year as of close on January 30. The company saw assets under management rise 15% year over year to $164.7 billion at the end of Q3 2019.

The stock last paid out a quarterly dividend of $0.21 per share. This represents an attractive 6.6% yield. Those who want monthly payouts can pursue a stock like TransAlta Renewables. It has thrived in the promising green energy sector, and it offers a monthly dividend of $0.07833 per share — a 5.6% yield.

Invest in real estate

Canada’s housing sector has generated a lot of press in recent years, as valuations soared over the past decade. This has made it an expensive proposition, especially for young investors, but it can also be extremely lucrative. Real estate also exists in a bit of a grey area, so there is certainly an active element here. This is not only true for rental properties but, in many cases, for primary detached houses that typically require constant care and attention.

Big valuations mean that most investors will need a loan to help facilitate a purchase. With a rental property, you can pay down the principle with the rental income you generate. Housing battled rough waters in 2017 and 2018, but the sector seems to be back on track in a more balanced market in 2020.

Turn to REITs

As lucrative as real estate has been in the 2010s, the return from real estate investment trusts (REITs) managed to outperform its traditional counterpart. Investment in a REIT allows you to invest in real estate while earning income in a truly passive way. Many top Canadian REITs also offer a high dividend yield.

Take Northview Apartment REIT as an example. Shares of this REIT have climbed 22% year over year at the time of this writing. REITs and other stable income-generating equities like utilities and telecoms performed well in 2019. Income investors turned back to equities as central banks appeared to commit to maintaining historically low interest rates in the face of global economic uncertainty.

This REIT holds a portfolio of residential suites in more than 60 markets. It offers a monthly dividend of $0.1358 per share, which represents a strong 5.2% yield.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned.

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