The government began the Canada Emergency Response Benefit (CERB) to aid Canadians who were left without income due to the pandemic. The program entailed a $2,000 per month payment to eligible Canadians for $500 weekly payments for up to 16 weeks. With no visible end to the pandemic, the government extended the program by eight more weeks to continue helping its citizens.
While the extension came as a sigh of relief, the government can’t practically keep extending the CERB. Creating your own CERB payout that comes with no eligibility criteria or expiry date can be a better option. It is doable, and I will discuss how you can create a passive income stream.
Creating your CERB
Creating a passive income stream of your own requires initial capital that you can invest, the right income-producing assets, time, and discipline.
Let’s consider that you want an income stream of around $2,500 per month. You would require a substantial reserve of cash that you can invest to create this much income. Ideally, a $400,000 investment in a portfolio of the right stocks can get you that income.
You need to invest in excellent long-term stocks that can provide you with a reliable income through thick and thin. One of the ideal names to consider is Bank of Nova Scotia (TSX:BNS)(NYSE:BNS). The Canadian bank is among the oldest financial institutions in the country, and it has a remarkable dividend-paying streak of almost 190 years.
The third-largest bank in Canada has been paying its shareholders their dividends through several recessions, wars, and even the global health crises from the past. At writing, the stock is trading for $55.98 per share, and it is down 24% from its price at the start of 2020. While the share price is low, it offers an inflated 6.43% dividend yield that should make it attractive for investors.
A $400,000 investment in BNS could earn you $25,720 per year, which is roughly $2,140 per month.
Another Canadian stock you can consider for its long-term reliability is Enbridge Inc. (TSX:ENB)(NYSE:ENB). Enbridge is among the top midstream energy companies in the country and a reliable dividend-paying stock on the TSX.
The company also has an excellent track record of increasing its dividends. While the oil price volatility adversely affects many companies, Enbridge enjoys relative insulation because that does not directly affect its earnings. While it means slower market movements for the company, it also ensures security for its ability to fund its dividend payouts.
At writing, Enbridge is trading for $41.91 per share, with a juicy 7.73% dividend yield. Investing $400,000 in Enbridge for its 7.73% yield could mean an annual return of almost $31,000 in dividends. That translates to more than $2,500 per month.
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Avoid having to pay back the Canada Revenue Agency (CRA) and create your own passive income stream.
You should keep in mind that raising the $400,000 capital will take significant discipline on your part and patience to hold your assets until they generate the cash flow you need. Do not tempt yourself with offbeat stocks that can offer you high-risk and high-reward options to grow your wealth. It is better to look toward companies that have been around for decades with excellent track records.
To this end, investing in Enbridge and Scotiabank could prove beneficial. Once you raise the capital you need, I would advise investing your money in a diversified portfolio of dividend-paying stocks that offer you reliable payouts at a decent dividend yield.
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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.