Want $3,600 in Yearly Passive Income? Buy 1,000 Shares of This Canadian Stock Now

Here’s an amazing Canadian dividend stock to buy in 2023 for reliable passive income for years to come.

| More on:
Canadian Dollars

Image source: Getty Images

The year 2022 didn’t prove to be so good for most retail investors, especially stock market beginners, as growing macroeconomic uncertainties drove the TSX Composite Index downward. Despite witnessing a sharp recovery in the fourth quarter, the index ended the year 8.7% down due mainly to a massive meltdown in high-growth tech stocks.

In such an uncertain economic environment, it really helps if you have some quality dividend stocks in your portfolio that can help you make passive income without taking big risks.

In this article, I’ll highlight one such safe Canadian dividend stock you can buy right now to earn $3,600 in yearly passive income, which is equivalent to $300 a month. Before I give you the math for the passive income at the end of the article, let me tell you the key reasons why I find this Canadian stock worth buying in 2023.

A top Canadian dividend stock to buy in 2023 for passive income

As you might already know, the stock market has been highly volatile lately. Given that, you should ideally pick fundamentally strong stocks with low volatility. Interestingly, many such large-cap stocks also continue to reward their investors with quality dividends even in a difficult market environment. TC Energy (TSX:TRP) could be a great example of such low-volatility Canadian dividend stock to buy in 2023.

After inching up by nearly 14% in the previous year, its share prices fell by 8.2% in 2022 due mainly to the broader market weakness. This Calgary-based natural gas-focused energy firm currently has a market cap of $53.3 billion, as its share prices trade at $ 52.33 per share. The stock offers an impressive annual dividend yield of 6.9% at this market price and distributes its dividends every quarter.

How reliable is this stock for earning passive income in Canada?

When investing in a stock to earn passive income, you shouldn’t forget to look at its underlying fundamentals, business model, and dividend history. For example, TC Energy has a decades-long track record of delivering value to long-term shareholders by consistently increasing dividends for decades.

With only a 7.1% increase in its total revenue in five years between 2016 to 2021, the company’s adjusted earnings jumped by a solid 53.6% with the help of its increasing profit margin. During the same five-year period, this Canadian dividend stock also raised its dividend per share by 54%, making it one of the best Canadian stocks to consider for passive income.

Although high inflationary pressures have driven its labour costs higher in the last year, TC Energy remains confident of delivering strong results in 2023, as it doesn’t see inflation leading to meaningful incremental pressure on its cost of funding or free cash flow generation in the next couple of years. With that, you can expect healthy appreciation in its share prices in the coming years apart from the passive income you earn from its dividends.

COMPANYRECENT PRICENUMBER OF SHARESINVESTMENTDIVIDENDTOTAL PAYOUT (YEARLY)DIVIDEND DISTRIBUTION FREQUENCY
TC Energy$52.331,000$52,330$0.90$3,600Quarterly
Prices as of Jan. 5, 2022

Bottom line

If you want to earn around $3,600 a year from TC Energy’s dividends (equivalent to $300 a month), you can buy 1,000 of its shares now. To buy these many shares at the current market price, you’ll need to make an investment of $52,330. While this example explains how you can easily earn reliable monthly passive income in Canada, even in difficult economic times, you should always consider diversifying your stock portfolio to lower your risk profile.

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.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

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 »