How to Earn $3000/Year in Reliable Passive Income

If you don’t like risk, but want to earn a solid passive income return, here’s a simple low risk portfolio that earns more than $3,000 per year.

| More on:
clock time

Image source: Getty Images

With inflation soaring, earning extra passive income is more important than ever. If you want a diversified investment portfolio with relatively low risk, here’s one way you could earn $3,000 a year with as little as $60,000 of capital.

A 5% One-Year GIC: Lowest risk passive income

Right now, with the yield curve inverted, you can buy short-term one-year GICs (Guaranteed Investment Certificates) at significantly higher interest rates than the past several years. In fact, with some smaller, online banks like EQ, you can lock-in one-year GICs with a 5% interest rate. If you put $12,000 into an EQ One-Year 5% GIC, you would earn $600 upon maturity.

There are a few things to understand with GICs. First, they are generally locked-in and unredeemable until maturity. You don’t collect your interest until the GIC fully matures.

Secondly, GICs pay interest, which is taxed at your personal income tax rate. That means they are best held in a registered account like a TFSA. Lastly, your return is limited to the interest earned, so you have low risk, but no capital upside.

TD Bank

If you want a step-up in potential returns, Canadian banks like Toronto-Dominion Bank (TSX:TD) are stalwarts for earning passive income. Combine its dividend and capital gains, and it has earned a compounded annual return of around 10% for the past 10 years.

Today, at $88.70, this passive income stock yields 4.4%. If you put $12,000 to work in TD stock, you would earn $129.60 per quarter, or $518.40 annually in dividends.

TD Bank is well-capitalized and prudently managed. It has an extremely strong retail network in Canada and the United States. The bank has decades of dividend growth under its belt, so investors are likely to get passive income upside over the longer term.


If you are looking for an outsized dividend, BCE (TSX:BCE) is a good place to look. As Canada’s largest telecommunication and media stock, it has the size and scale that provide it a solid competitive advantage.

At $60 per share, BCE stock earns a 6.2% dividend yield. Put $12,000 in BCE stock and you would earn $184 every quarter, or $736 annually.

BCE is not growing very fast. However, it is nearing completion of a large capital growth plan. That should yield strong free cash flows in the future. That means more passive income will likely be coming to shareholders in the form of dividend increases.


Energy is a great place to look for passive income. Canadian Natural Resources is an ideal stock to collect dividends. It is Canada’s largest oil and gas producer. It is incredibly efficient and well-managed. With oil over US$70 per barrel, it continues to generate a tonne of excess cash.

At $70.50, it trades with a 4.5% dividend yield. $12,000 in CNQ stock would yield $144.50 of dividends per quarter, or $578 annually. For 22 years, CNR has increased its dividend annually. Last year, it even paid a special $1.50 per share dividend!

Brookfield Renewable: Passive income and growth

If you want exposure to renewables, Brookfield Renewable Partners is another alternative. It is one of the largest pure play renewable power stocks in the world. Given demand for green energy, the company has a very attractive long-term growth profile.

You can buy this passive income stock with a 4.8% yield at $35.80 per share. $12,000 invested in Brookfield Renewables would earn $144.05 quarterly, or $576 per annum. It targets 5-7% annual dividend growth. This is a great stock for stable income and long-term growth ahead.

EQ Bank 1 Year GICN/AN/A5%$600.00Annual
Toronto-Dominion Bank$88.70135$0.96$129.60Quarterly
Canadian Natural Resources$70.50170$0.85$144.50Quarterly
Brookfield Renewable Partners$35.80335$0.43$144.05Quarterly
Prices as of January 2023.

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 Robin Brown has positions in Brookfield Renewable Partners. The Motley Fool recommends Brookfield Renewable Partners and Canadian Natural Resources. The Motley Fool recommends EQB. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Dividend Stocks

3 Canadian REITs That Pay Out Every Month

$10 can buy you a stake in a REIT that pays monthly distributions yielding 8.2% annually. CT REIT and another…

Read more »

A meter measures energy use.
Dividend Stocks

3 Reasons to Buy Utility Stocks in 2023

Here's why adding utility stocks to your portfolio is a smart idea, as we face significant uncertainty in 2023.

Read more »

Modern buildings in business district
Dividend Stocks

2 Top Residential REITs to Buy in February 2023

These two top residential REITs to buy offer attractive passive income as well as long-term growth potential.

Read more »

Simple life style relaxation with Asian working business woman healthy lifestyle take it easy resting in comfort hotel or home living room having free time with peace of mind and self health balance
Dividend Stocks

TFSA Investors: Make $102/Month Without Lifting a Finger

Here’s an amazing monthly Canadian dividend stock that can help TFSA investors earn reliable passive income for years.

Read more »

Dividend Stocks

TFSA Passive Income: Earn $129/Month Tax Free

Do you seek passive income? Leverage your TFSA to earn tax-free passive income via these Dividend Aristocrats.

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

How to Invest $23,000 in 2023 to Create Passive Income

Here's how income-generating cash cows such as Canadian Utilities and TC Energy can help you earn over $1,000 in annual…

Read more »

Early retirement handwritten in a note
Dividend Stocks

2 High-Dividend Stocks to Buy Today for Early Retirement

You can buy these two high-dividend Canadian stocks right now to help you plan an early retirement from work.

Read more »

worry concern
Dividend Stocks

Worried About Market Downturn? Buy This High-Yielding (6.3%) Dividend Stock

The stock market has been pretty volatile lately. It’s better to have a balanced portfolio that can perform in every…

Read more »