While $27 a day may not seem much, it can buy you dinner or a cup of coffee a day during your work week. However, passive income of $27 a day quickly adds up to $821 a month or $9,855 a year!
According to Trading Economics, the average hourly wage in Canada is close to $27. If you can generate passive income of $9,855 a year, it’s like getting an extra hour of income without doing any work!
There are different options to generate passive income. One straightforward way to do so is by investing in dividend stocks. Some dividend stocks that are relatively attractive today include Toronto-Dominion Bank (TSX: TD)(NYSE: TD), Enbridge (TSX: ENB), and Brookfield Property Partners (TSX: BPY.UN)(NASDAQ:BPY).
Pandemic impacts depressing these passive-income stocks
They are top businesses in their respective industries and are being disrupted by the pandemic. Higher credit losses are expected for all banks this year, including TD Bank, which will cut into the bank’s 2020 earnings.
Enbridge is being impacted by lower energy demand. Tropical storm Zeta will also drag down its results as the storm puts a halt on some of Enbridge’s Gulf of Mexico assets. Still, Enbridge’s low-risk, highly-contracted business model makes it a defensive choice for passive income in the energy space.
Brookfield Property is seeing the biggest impacts in its core retail properties due to economic shutdowns. Consequently, the company’s funds from operations shrunk 31% in the first half of the year. Thankfully, it has ample liquidity to take advantage of its low stock price and has been buying back shares. The stock has appreciated about 85% from its low in March! Additionally, its retail portfolio rent collection has shown strong improvement as soon as re-openings were allowed.
Data by YCharts. Year-to-date price actions of TD stock, Enbridge stock, and Brookfield Property stock.
The three stocks are trading at meaningful discounts from their trading levels at the start of the year. Their lower stock prices lift their dividend yields, as long as the companies maintain their dividends. And they have.
Get passive income with a 7.9% dividend yield
Currently, TD stock, Enbridge stock, and Brookfield Property stock yield 5.4%, 8.6%, and 9.7%, respectively. If you invest the same amount of money in each, you’ll get an average yield of 7.9%.
To get $27 a day in passive income on a yield of 7.9%, you’re required to invest a total of $124,747 (or $41,582 in each stock).
This is juicier passive income than being a landlord! Landlords even have to do some work such as property maintenance and catering to tenants. When you buy stocks like TD, ENB, and BPY, you can essentially buy the stocks and do nothing and watch the passive income roll in.
What’s impressive is that these three dividend stocks also tend to increase their payouts. Between them, a dividend growth rate that surpasses inflation, in the long run, should be a piece of cake.
The Foolish takeaway
Don’t take small amounts lightly. Start investing for passive income in proven stocks like TD, Enbridge, and Brookfield Property today.
They are stumbling this year, which makes their stocks attractive for long-term investment. They’re compelling with elevated yields of 5-10%. As well, you can expect dividend growth and above-average price appreciation over the next three to five years.
