How to Make $1,500 in Passive Income 4 Times a Year

Blue-chip TSX stocks such as Enbridge can enable investors to create game-changing wealth over the long term.

| More on:

In the last few months, several companies across sectors have laid off employees, citing challenging macroeconomic conditions. Economic cycles are inevitable, which means it’s advisable for individuals to create multiple income streams, providing them with the required financial flexibility to get through a downturn.

One capital-efficient way to create a passive-income stream is by investing in blue-chip dividend stocks. You need to identify companies that are part of mature industries and can generate consistent cash flows across business cycles. Typically, blue-chip companies allocate a portion of these profits towards dividends, making them attractive to income-seeking investors.

One such dividend stock trading on the TSX is Enbridge (TSX:ENB), a Canada-based energy infrastructure giant. Let’s see how you can invest in ENB stock to generate $1,500 in dividend income each quarter.

Enbridge is a Dividend Aristocrat

Since 1995, Enbridge has increased its dividend payouts at an annual rate of 9.8%, which is quite remarkable. In the last 28 years, Enbridge has witnessed the dot-com bubble, the financial crash, a global pandemic, and an inflation-fueled higher-pricing environment. Despite these challenges, the Canadian energy behemoth has not only maintained but increased dividends each year for almost three decades.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCY
Enbridge$54.271,693$0.8875$1,502Quarterly

If you’d invested $10,000 in ENB stock back in early 1995, you could have brought 2,732 shares of the company. These shares would have generated $683 in dividends in the next 12 months, indicating a yield of 6.8%. If you own 2,732 ENB shares today, your annual dividend payout will amount to $9,398.

We can see how staying invested in blue-chip dividend stocks can help shareholders create game-changing wealth over time. Right now, ENB stock offers shareholders a dividend yield of 6.5%, which is quite tasty.

Due to its high payout, Enbridge has returned 1,750% to shareholders since January 1995 after adjusting for dividends. Comparatively, the TSX has surged 427% in this period.

Is Enbridge a buy or a sell today?

Enbridge operates a low-risk pipeline utility business that allows the company to derive steady cash flows. Additionally, the cash flows are rate regulated and backed by inflation-indexed long-term contracts.

With a payout ratio of 65%, Enbridge’s dividend is sustainable while allowing the company to reduce balance sheet debt and reinvest in capital expenditures. For instance, in recent years, Enbridge has gained traction in the renewable energy vertical, which now accounts for 4% of total cash flows.

It also has a backlog of commercially secured capital projects, which will be operational in the next few years. Enbridge remains focused on expanding its base of cash-generating assets, which will result in an increase in cash flows and support future dividend increases. Enbridge is well poised to increase its cash flow per share between 5% and 7% through 2024.

Equipped with an investment-grade balance sheet, Enbridge remains a top bet for investors looking for consistent gains. ENB stock is priced at a discount of 9% compared to consensus price target estimates. After accounting for its dividends, total returns will be closer to 15% in the next year.

The Foolish takeaway

If you want to earn $6,000 annually in dividend income, you need to buy 1,693 shares of Enbridge. At its current price, the total investment will amount to more than $91,000. But investing such as a large amount in a single stock is quite a risky proposition, as dividends can be revoked or suspended at any time.

So, you need to identify similar blue-chip TSX stocks and create a robust portfolio of dividend-paying giants.

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 Aditya Raghunath has positions in Enbridge. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Confused person shrugging
Dividend Stocks

Here’s How Many Shares of Telus You Should Own to Get $3,969 in Yearly Dividends

There are many ways to earn returns from stocks, capital appreciation, compounding, and dividends. Telus can give you all three.

Read more »

senior man and woman stretch their legs on yoga mats outside
Dividend Stocks

TFSA Passive Income: How Couples Can Earn $8,160 Per Year Tax-Free

This TFSA strategy can boost income while reducing capital risk.

Read more »

Canadian dollars in a magnifying glass
Dividend Stocks

Got $7,000 to Invest? Where I’d Focus My Attention on Canadian Stocks Right Now

These three top Canadian stocks are ideal additions to your portfolios in this uncertain outlook.

Read more »

monthly desk calendar
Dividend Stocks

Monthly Income Champions: 3 Canadian Dividend Stocks Yielding Over 7%

These three monthly-paying dividend stocks with an over 7% yield offer excellent buying opportunities for income-seeking investors.

Read more »

ETF chart stocks
Dividend Stocks

3 ETFS to Power Your TFSA Growth Strategy

Want to grow your TFSA but not sure which stocks to choose? Then ETFs are the best option.

Read more »

Happy shoppers look at a cellphone.
Dividend Stocks

How I’d Invest $6,500 in Canadian Retail Stocks to Increase My Net Worth

Retail stocks aren't getting much attention right now, but the right picks could quietly boost your portfolio in a big…

Read more »

bulb idea thinking
Dividend Stocks

The Smartest Canadian Stock to Buy With $7,000 Right Now

Do you want long-term income for a steal of a deal? Then consider this smart stock.

Read more »

Dividend Stocks

3 Big Income Stocks to Buy for May 2025

Discover valuable insights on building an income portfolio that balances the need for immediate income and long-term growth.

Read more »