Passive Income: 3 Ways to Build Your Empire in 2020

Investors can build a passive-income empire by pursuing REITs and other high-yield dividend stocks this year.

Simple life style relaxation with Asian working business woman healthy lifestyle take it easy resting in comfort hotel or home living room having free time with peace of mind and self health balance

Image source: Getty Images

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.

More on Dividend Stocks

edit U-turn
Dividend Stocks

Down 11% From its 52-Week High, Can goeasy Stock Turn Things Around?

Investors looking for value should be drooling at goeasy (TSX:GSY) stock. With a higher dividend and more room to run,…

Read more »

calculate and analyze stock
Dividend Stocks

Sun Life Stock Is Paying $3.24 Per Share in Dividends: Time to Buy the Stock?

Sun Life (TSX:SLF) stock recently bumped its dividend upwards by 4%, creating even more value for investors today.

Read more »

A Canada Pension Plan Statement of Contributions with a 100 dollar banknote and dollar coins.
Dividend Stocks

Retirees: Here’s How to Boost Your CPP Pension

If you hold dividend stocks like Fortis Inc (TSX:FTS) in a TFSA, you'll take home more income than if you'd…

Read more »

A worker gives a business presentation.
Dividend Stocks

3 Safe Dividend Stocks to Own for the Next 10 Years

Given their consistent performances, healthy growth prospects and solid cash flows, these three dividend stocks are excellent buys for the…

Read more »

A bull outlined against a field
Dividend Stocks

The Bullish Market Left These 3 Stocks Behind, But They’re Buys Right Now

The bullish market left Air Canada (TSX:AC) stock behind.

Read more »

grow money, wealth build
Dividend Stocks

2 Ultra-High-Yield Stocks to Buy Hand Over Fist and 1 to Avoid

I have identified two ultra-high-yield stocks that have fallen to their lows despite strong fundamentals because of sector weakness.

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

3 Stocks Under $50 New Investors Can Confidently Buy

Investors looking for strong stocks can be a bit overwhelmed with options. Which is why today we're looking at these…

Read more »

Golden crown on a red velvet background
Dividend Stocks

Cash Kings: 3 TSX Stocks That Pay Monthly

These monthly dividend stocks offer steady and predictable income and high yields, making them attractive to investors seeking regular cash…

Read more »