3 Passive-Income Stocks That Make Me Money While I Sleep

I get passive income from dividend stocks like Toronto-Dominion Bank (TSX:TD).

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When you hold dividend stocks, you can make money while you sleep. With dividends, you can make money without working.

Now, I’ll be the first to tell you that “passive dividend income” can be overhyped. I get about $1,701 in dividend/interest income per year, and it takes a $92,000 portfolio to achieve that much. You have to invest quite a bit to earn any passive income. Nevertheless, it can be done. In this article, I will share three stocks that are paying me a decent amount of passive income in 2023.

TD Bank

Toronto-Dominion Bank (TSX:TD) is a bank stock that has a heavy weighting in my portfolio. In fact, it’s the heaviest weighted stock in my portfolio. I like TD Bank because it’s a lender that benefits from high interest rates, has conservative risk-management principles and has a track record of stability. In the 2008 financial crisis, TD was never at serious risk of collapse, even though many U.S. banks (including those TD itself owned) were suffering many mortgage defaults at the time. This is because TD uses sound risk-management principles to ensure that it stays safe.

TD put out a pretty good showing in its most recent quarter. In it, the bank delivered a 76% increase in GAAP earnings (earnings calculated using normal accounting rules), and a 5% increase in adjusted earnings. It was a pretty solid showing. Many banks did well last quarter, as high interest rates lifted their earnings, but TD did even better than most. On that note, TD just recently got all the regulatory approvals it needed to buy the U.S. investment bank Cowen, so it may see its earnings increase again in the quarters ahead.

Bank of America

Bank of America (NYSE:BAC) is another bank like TD that is doing well this year. Many of the points I made about TD apply here, too: it’s growing, its last quarter beat analyst expectations, it has good risk management, and more.

One thing investors will want to watch out for with Bank of America is its investment banking division. Investment banking has done poorly over the last year, because not many people want to take their companies public in a bear market. It is what it is, but nevertheless, BAC still managed to eke out small, positive growth in earnings last quarter (3.8%).

Taiwan Semiconductor

Taiwan Semiconductor Manufacturing (NYSE:TSM) is a Taiwanese technology stock with a 2% dividend yield. The dividend on this stock isn’t very high, but it has a lot of potential to grow. Unlike many other chip stocks, TSM is still growing this year.

In its most recent quarter, its revenue increased 43% and its earnings increased 78%. It’s an incredibly strong showing made even more impressive by the fact that other semiconductor companies mostly had negative earnings growth in the same period. All this earnings growth can lead to dividend growth in the future, so I’m expecting good things from TSM.

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.

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Fool contributor Andrew Button has positions in Toronto-Dominion Bank, Bank of America and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Bank of America and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

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