How I’d Invest $1,000 in January for Easy Passive Income

Are you looking for ways to generate passive income? These three stocks make that easy!

| More on:
Various Canadian dollars in gray pants pocket

Image source: Getty Images

Passive income is something that many investors dream of generating. Fortunately, it can come easier than you think. Dividend stocks generally have a low barrier of entry. However, it will take a lot of capital and even more time before those dividends turn into something that can help sustain your everyday life. That’s why it’s important to invest in companies that make this process as easy as possible.

In this article, I’ll discuss three stocks that I’d be willing to invest $1,000 in for easy passive income.

This company has a long history of raising its distribution

When looking at dividend stocks, one of the first things I consider is whether the company has been able to raise its dividend over the years. This is important to consider, because investors could lose buying power over time if a stock’s dividend remains stagnant. That’s why consulting the list of Canadian Dividend Aristocrats could be a good idea.

Looking at that list, investors can see that Fortis (TSX:FTS) holds one of the longest dividend-growth streaks in Canada (49 years). The company has already stated that it has plans to continue growing its dividend through to at least 2027. That long dividend-growth streak combined with an attractive forward dividend yield of 4.17% makes Fortis an easy choice for any passive-income portfolios. A $1,000 investment could get you $10.17 per quarter.

Dividend-growth rates should be considered

Investors should also keep in mind how fast a company is able to raise its dividend. Generally, inflation rises at 2% on an annual basis. Obviously, this wasn’t true in 2022, as consumers saw inflation increase at ridiculous rates. However, generally, a dividend-growth rate of 10% should be enough to keep investors on the right side of inflation.

Canadian National Railway (TSX:CNR) is a company that has been able to raise its dividend at a compound annual growth rate of 15.7% over the past 26 years. That not only gives Canadian National one of the longest dividend-growth streaks in the country, but its growth rate has allowed shareholders to beat inflation. A $1,000 investment in this company today could result in a dividend payout of $4.398 on a quarterly basis.

When in doubt, focus on blue-chip stocks

If you’re looking for a larger list of prospective dividend stocks to add to your portfolio, turn towards a list of blue-chip Canadian companies. For instance, the S&P/TSX 60 is a list of 60 large companies that lead important Canadian industries. Many of the companies included on that list have long histories of distributing dividends to investors. One benefit of investing in a blue-chip company is that you can be assured that the company has already cemented its place within the economy. That could help make it easier to hold that stock during tougher economic times.

Telus (TSX:T) is an example of a great stock to consider. This is one of the largest telecom companies in Canada. In terms of its dividend, the company claims one of the most impressive dividend-growth streaks in the country (18 years). Telus offers investors a forward dividend yield of 5.37%. As of this writing, $1,000 could get you 37 shares. That would give you a quarterly dividend payout of $12.99 based on Telus’s most recent distribution.

StockStock PriceDividend Per ShareShares Purchased With $1,000Total Payout Per Quarter
Canadian National Railway$163.05$0.7336$4.398

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 Jed Lloren has no position in any of the stocks mentioned. The Motley Fool recommends Canadian National Railway, Fortis, and TELUS. 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 »