2 Ultra-Safe Passive-Income Stocks to Buy Right Now

If the GIC income of about 5% doesn’t satisfy you, you can consider parking long-term capital in ENB and BNS stocks for passive income.

| More on:
data analyze research

Image source: Getty Images

For risk-free passive income, Canadians can consider one-year Guaranteed Investment Certificates (GICs) for a return of about 5%, coming from interest income. You’re also guaranteed to get your principal back.

If you need even more passive income, you might turn to dividend stocks. You probably have heard that you can burn yourself if you reach for high yields. However, currently, you can get yields of over 6% that are ultra safe from the following dividend stocks.

Moreover, these dividend stocks pay out eligible dividends that are more favourably taxed than interest income, which are fully taxable at your marginal tax rate if the investment are held in non-registered accounts.

Without further ado, here are the ultra-safe TSX stocks you can buy now for passive income.

Enbridge stock

Large-cap energy infrastructure stocks TC Energy and Enbridge (TSX:ENB) provide similar dividend yields of 6.7% and 6.8%, respectively. However, unlike its peer, TC Energy, Enbridge stock is not plagued by the bad press surrounding the oil spill at the moment. Since the news, TC Energy stock has declined about 7%, while Enbridge stock is down about 2%.

Often, Enbridge is viewed more as a utility company than an energy company because of its stable cash flow generation that has supported 70 years of dividend payments! Furthermore, ENB stock has increased its dividend for about 26 consecutive years.

Its cash flows are high quality. They are diversified across over 40 sources, and 95% come from investment-grade customers. About 80% of its cash flows are also protected from inflation.

Management projects its distributable cash flow per share could grow 5-7% per year through 2024. So, investors should have no problem getting dividend increases of at least 3% annually through this period. In fact, ENB stock just hiked its dividend by 3.1% last month.

At $52.38 per share at writing, the blue-chip stock trades at a discount of about 10% from its fair value. ENB stock is a good buy for passive income now. If you’re looking for a better bargain, wait to see if you can grab it at or below $50 per share over the next few months.

BNS stock

Bank of Nova Scotia (TSX:BNS) stock is another blue-chip stock you can rely on for juicy passive income. For the greater risk that you’re taking (versus GICs), you can pocket a dividend yield of about 6.3%. Additionally, you’ll enjoy long-term price appreciation over an economic cycle.

The big Canadian bank stock’s greater risk is playing out in this high inflationary and high interest rate environment than its peers because of its exposure to higher-risk markets in South America. So, the bank stock has experienced greater pressure.

At $65.70 per share at writing, BNS stock trades at about 7.8 times earnings, which is a substantial discount of 30% from its long-term normal valuation. For the near term, analysts think the stock is discounted by 16%.

In any case, the bank stock is well capitalized and maintains a sustainable payout ratio of about 50%.

To sum it up, if you have long-term capital that you don’t foresee using for at least five years, you can consider parking it in Enbridge stock and BNS stock for passive 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 Kay Ng has positions in Bank Of Nova Scotia. The Motley Fool recommends Bank Of Nova Scotia and Enbridge. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Business people standing near houses models
Dividend Stocks

Why Canadian Apartment Properties REIT Notched a 15% Gain in January 2023

CAPREIT may not look like a deal at the outset, but long-term growth projections would disagree – especially when considering…

Read more »

edit Businessman using calculator next to laptop
Dividend Stocks

1 Oversold Dividend Stock (With a 8% Yield) I’m Buying Right Now

Real estate investment trusts Northwest Healthcare offers investors a tasty dividend yield of almost 8%.

Read more »

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

2 Recession-Resistant Stocks to Buy for Steady Gains in 2023

Investors worried about a recession can look to buy utility stocks such as Hydro One and Waste Connections right now.

Read more »

Dial moving from 4G to 5G
Dividend Stocks

Down by 15%: Is BCE Stock a Good Investment in January 2023?

Few companies are truly “too big to fail,” but most market leaders are far more resilient against market headwinds or…

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Dividend Stocks

Looking for $200/Month in Alternative Income? Buy 530 Shares of This Stock

Do you want to earn $200 monthly alternative income for the next few years? Then accelerate your investments in this…

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

Deadline Coming: 3 TFSA Stocks to Buy Now Before Dividend Payouts

Invest in RNW stock and 2 other TFSA friendly names before this fast-approaching deadline to get the full 2023 dividend.

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

Passive Income: How to Earn Nearly $367 Per Month in Your TFSA Portfolio

Top TSX dividend stocks now trade at discounted prices for TFSA investors seeking passive income.

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Dividend Stocks

3 Stocks I’d Buy — But I’m Waiting for a Dip

After the recent bounce, It may be smart for investors to wait for a dip before they buy these solid…

Read more »