2 Passive-Income Stocks to Buy and Hold Forever

These two passive-income stocks could be excellent long-term investments due to their reliable and growing shareholder dividends.

| More on:
money cash dividends

Image source: Getty Images

Dividend investing in the right stocks trading on the TSX can become a gift that keeps on giving. You can use your shareholder returns through the dividend payouts to supplement your active income, which can help you manage your monthly expenses better.

Suppose that you are doing well enough with your active income that you don’t need another revenue stream to support your expenses. In that case, you can choose to reinvest your shareholder dividends to unlock the power of compounding and accelerate your wealth growth.

Investing early and staying invested in these dividend stocks for decades could help you reach a point by your retirement where you could use the higher dividend income to supplement your pension income in your golden years.

Today, I will discuss two Canadian dividend stocks that you could consider if you have a long investment horizon to meet your financial goals.

Canadian Imperial Bank of Commerce

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is a $74.86 billion market capitalization multinational banking and financial services company headquartered in Toronto. CIBC is one of the Big Six Canadian banks, and it could be a viable investment for you to consider if you are looking for income-generating assets to buy and hold for a long time.

CIBC expects to see its profit margins for its operations in the domestic market and the U.S. increase considerably with impending interest rate hikes in both countries later this year. A sharp spike in interest rates could cause issues by placing the bank’s residential mortgage portfolio at risk of loan defaults. However, that’s unlikely to happen, because the housing demand will likely remain strong, even as rates rise due to low supply.

The bank has more than enough capital set aside to ride the wave if a downturn does take place. At writing, CIBC stock trades for $164.89 per share, and it boasts a juicy 3.91% dividend yield that you could lock into your portfolio today.

Enbridge

Enbridge (TSX:ENB)(NYSE:ENB) is a $112.18 billion giant in the Canadian energy industry headquartered in Calgary. The company boasts an extensive energy infrastructure portfolio that’s responsible for transporting a substantial portion of all the natural gas and crude oil used in North America, making its services essential to the economy.

Enbridge is a strong business that generates considerable cash flows. The company’s management can use its revenues to fund its rising shareholder dividends comfortably. Enbridge also boasts substantial long-term growth potential as it expands into the renewable energy industry. At writing, Enbridge stock trades for $54.99 per share, and it boasts a juicy 6.26% dividend yield.

Foolish takeaway

CIBC stock and Enbridge stock pay attractive shareholder dividends that are likely to continue growing over the years based on the respective track records for both companies. If you have some contribution room available in your Tax-Free Savings Account, you could allocate some of it to buying and holding these two stocks to enjoy tax-free returns on your investment.

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 recommends Enbridge.

More on Dividend Stocks

calculate and analyze stock
Dividend Stocks

4 Fabulous Dividend Stocks to Buy in July

Are you looking for long-term income? These four dividend stocks should not only provide you with value in July but…

Read more »

financial freedom sign
Dividend Stocks

5 Steps to Financial Freedom for Canadian Millennials

Follow these steps and nothing can stop Canadian millennials from achieving their early retirement dreams.

Read more »

Investor wonders if it's safe to buy stocks now
Dividend Stocks

We’re Only Getting Older: A Top TSX Stock That Benefits From an Aging Population

For a bet on the aging population, consider this small-cap stock with growth potential.

Read more »

Growing plant shoots on coins
Dividend Stocks

Yield Today, Growth Tomorrow: 3 Stocks to Keep Building Your Wealth

For investors seeking yield today and growth tomorrow, these top Canadian dividend stocks are certainly worth considering right now.

Read more »

Payday ringed on a calendar
Dividend Stocks

This 10.72% Dividend Stock Pays Cash Every Month

This dividend stock remains a consistent, defensive dividend producer that will give up over 10% in income each and every…

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

TFSA Investors: 2 Standout Domestic Stocks With 7% Yields

These top dividend-growth stocks look oversold.

Read more »

Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

Despite their recent declines, the long-term growth outlook of these two top dividend stocks remains strong, which could help their…

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

Growth Stocks vs. Value Stocks: Which Should You Choose?

There are growth stocks and value stocks, but there are also growing value stocks that fit into both sides of…

Read more »