How to Build Your Own $2,000/Month CERB

Why keep relying on CERB when you can get more passive income through dividends from Scotiabank and Enbridge.

| More on:
Payday ringed on a calendar

Image source: Getty Images

The Canadian government’s COVID-19 Response Plan included giving $2,000 per month to eligible Canadian citizens who lost their jobs due to the government-mandated lockdown amid the pandemic.

Known as the Canada Emergency Response Benefit (CERB), the program would pay $500 per week to applicants for up to 16 weeks. There is no visible end to the pandemic, but economies across the country are reopening and adding hundreds of thousands of jobs. Still, it will take time for the millions rendered jobless to earn an income.

The government provided them with additional relief by extending the CERB for another eight weeks. While the additional support is something to appreciate, the government cannot keep extending the benefit. It would be wise to create your own CERB that will last a lifetime rather than relying on burdening the government.

Creating $2,000 per month in passive income is possible. All it takes is time, discipline, and the right investments.

Creating a CERB for yourself

Creating a passive-income stream to earn an additional $2,000 per month carries the prerequisite of having $400,000 of investable capital. It is a substantial amount, but you can accumulate it. For now, let’s discuss how you can use $400,000 to possibly earn more than the $2,000 CERB money per month.

If you have a reserve like this, you can consider investing in dividend-paying companies. One such company to consider would be Enbridge (TSX:ENB)(NYSE:ENB). At its current price, Enbridge pays its shareholders at a juicy 7.76% dividend yield. Investing $400,000 in the stock can help you earn $31,000 per year in dividends.

That is more than $2,500 per month. Enbridge also consistently grows its payouts each year, and that can help you grow your overall income to keep pace with inflation. The midstream energy company enjoys relative safety from volatility in crude oil prices, and that is what allows the company to continue financing its high dividend payouts.

Another stock you can consider investing in with a reserve like this to create your own CERB is the Bank of Nova Scotia (TSX:BNS)(NYSE:BNS). One of the oldest financial institutions in the country, Scotiabank has a streak of paying its shareholders their dividends for more than 187 years. At its current price and dividend yield, investing in shares of the bank can help you earn $25,680 per year, which translates to $2,140 per month.

Scotiabank is a stock well known for its potential as a long-term investment. It is the third-largest bank in Canada and has persevered through multiple recessions in the few centuries it has been around. The COVID-19 pandemic might be horrific, but it has the kind of liquidity to weather the storm and continue paying its shareholders.

Discipline is necessary

You should note that it is unnecessary to invest in high-risk and offbeat stocks to earn a substantial income. There is no point in parking your money in any asset that can just as quickly sink your capital as it can double it. The idea is to look for businesses that have risen through several economic downturns and can offer you stability.

Creating a $400,000 reserve so you can invest for a decent dividend income to create your CERB should also come through investing in safe and reliable dividend stocks. Invest in a portfolio of reliable dividend stocks and reinvest the dividends to unlock the power of compounding. It may take more than 15 years to build a decent sum to invest, but patience and discipline are paramount.

Foolish takeaway

CERB money is available right now, but creating your own CERB can take several years. However, the patience and perseverance to generate the capital to invest in a dividend-income portfolio can be well worth the effort. It can help you generate passive income for the best years of your life without worrying about expiry dates or eligibility criteria to keep receiving your income.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends BANK OF NOVA SCOTIA.

More on Dividend Stocks

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »

Payday ringed on a calendar
Dividend Stocks

3 Dividend Stocks That Pay Me More Than $54.57 Per Month

These three dividend stocks have done me well over the years, so let's look at how much I've gotten in…

Read more »

Golden crown on a red velvet background
Dividend Stocks

Dividend Royalty: 3 Fabulous Stocks to Buy Now for Decades of Passive Income

Rogers Communications stock and Canadian Natural Resources stock could pay you dividends for decades to come.

Read more »

Dividend Stocks

The Top Canadian REITs to Buy in April 2024

For growth and dividends this April, look to these two REITs that have quite the promising present as well as…

Read more »