Build These 2 Passive Income Streams in 2020

SmartCentres and Keyera are two fantastic options that many Canadians consider to create passive income streams.

Adam Othman

Adam is a value investor who is always on the hunt for fantastic undervalued companies that he can share with Motley Fool readers. He follows Warren Buffett and Charlie Munger's investment advice and has completed the Canadian Securities Course. When he's not investing, Adam can usually be found traveling or skiing.

Published March 3, 2020 9:05 am EST

Being an investor in Canada in 2020 is fantastic because you have plenty of options to create passive income streams. You can use passive income to increase your potential spending power or to accumulate substantial funds for retirement.

Today I want to discuss the two proven ways to make your money earn for you.

The real estate market is a phenomenal play for earning income. Investing in real estate investment trusts (REITs) and owning shares of dividend-paying companies can provide you with remarkable returns.

To this end, I’m am going to discuss SmartCentres REIT (TSX: SRU.UN) and Keyera Corporation (TSX: KEY).

Investing in REITs

Investing in actual income-generating real estate could prove beneficial due to rising property value and rental income. However, it comes with downsides. It requires significant capital upfront to purchase a property, and you need to put in a lot of effort with the upkeep of a property.

Investing in REITs, on the other hand, allows you to enjoy the benefits of the real estate sector without the hassles that come with it. SmartCentres REIT, for instance, is a high-quality real estate stock to consider. The $4.33 billion market capitalization REIT can be an ideal safeguard against recession and inflation.

The REIT’s portfolio consists of assets such as retail stores, destination outlets, unenclosed shopping centres, and power centres. Investing in SmartCentres could be a smart decision due to the diversity it offers. Around 115 properties managed by the REIT have Walmart as the tenant – an anchor tenant that will be around for a while.

The REIT is trading for $29.92 at the time of this writing, offering shareholders a juicy 6.15% dividend yield.

Investing in dividend-paying stocks

Keyera is a stock that can help you earn through its stellar dividends. Keyera is a favourite stock for many Canadian retiree investment portfolios. It’s a midstream oil and gas company with a $6.91 billion market cap. It has been a significant part of Canada’s energy sector for the past 20 years now.

The company transports, stores, and markets natural gas liquids as well as iso-octane. It operates in the U.S. and Canada. Keyera’s Gathering and Processing business units work with a network of almost 4,000 kilometers of pipelines.

Keyera also boasts a portfolio of 17 natural gas-processing plants located in the Western Canada Sedimentary Basin. Keyera has become one of the largest independent midstream energy companies in Canada in just two decades.

The stock has been consistently on the rise for the past four years, paying investors a 6.05% dividend yield. The energy company expects its expansion projects to proliferate and looks like a likely investment for the long term.

Foolish takeaway

You need to consider reliable income-generating assets in your portfolio if you want to enjoy passive income to meet your financial goals. If you wish to increase your spending money or accumulate funds for retirement, REITs and dividend stocks could be beneficial for you.