Here’s How Much to Invest for $10,000 in Dividends Each Year

Blue-chip dividend stocks can help you earn a passive stream of income. There are several companies trading on the TSX that pay investors a dividend. But only a handful of these stocks should be part of your dividend portfolio.

You need to identify companies that generate earnings across business cycles. Further, these profits and cash flows should ideally move higher over time, allowing companies to increase dividends each year.

I have shortlisted five such fundamentally strong blue-chip TSX stocks that can help you earn $10,000 in annual dividend income.

Enbridge

One of the largest companies in Canada, Enbridge (TSX: ENB), currently offers investors a tasty dividend yield of 6.9%. While Enbridge is part of the extremely cyclical energy sector, it has managed to increase dividends by 10% annually since 1995, which is quite remarkable.

Enbridge has an investment-grade balance sheet, and its cash flows are backed by long-term contracts, which are indexed to inflation. The energy giant will continue to invest in capital expenditures, allowing it to expand its asset base and increase dividends in the future.

In the last two decades, ENB stock has returned 1,000% to investors.

Bank of Nova Scotia

Bank of Nova Scotia (TSX: BNS) pays investors annual dividends of $4.12 per share, indicating a forward yield of 6%. Unlike bank stocks in the U.S., BNS and its Canadian peers are much more conservative. This approach has allowed BNS to maintain payouts, even during the financial crash of 2009 and the COVID-19 pandemic.

The current environment of rising interest rates may allow BNS to increase profit margins and offset tepid demand for consumer, corporate, and mortgage loans.

Valued at nine times forward earnings, BNS stock is quite cheap, given its enviable dividend payout and robust balance sheet.

TransAlta Renewables

One of the largest clean energy stocks on the TSX, TransAlta Renewables (TSX: RNW) offers you a dividend yield of 8.2%. It develops, owns, and operates renewable power generation facilities in Canada, the United States, and Australia. It owns 26 wind facilities, 13 hydro facilities, eight natural gas facilities, two solar facilities, a natural gas pipeline, and a battery storage project that allows it to generate 2,968 megawatts of capacity.

Priced at a discount of 16.5% compared to consensus price target estimates, RNW stock can return 25% to shareholders after accounting for its dividend.

Brookfield Renewable

Another clean energy company, Brookfield Renewable (TSX: BEP.UN) has already returned 1,840% to shareholders in the last 20 years. Trading 37% below all-time highs, BEP stock currently has a juicy yield of 5.2%.

Equipped with power-generating facilities in North and South America, Europe, China, and India, BEP generates power through wind, solar, hydro, and even biomass sources. Its current portfolio has an installed capacity of 21 megawatts, which is expected to triple in the upcoming decade, making it a top stock to own right now.

Brookfield Infrastructure

The final stock on my list is Brookfield Infrastructure (TSX: BIP.UN), which is a recession-resistant company and one that enjoys pricing power. BIP stock has a dividend yield of 4.6% and remains attractive to the income-seeking investor.

The infra behemoth owns and operates toll roads, utilities, data centres, and midstream businesses globally. This diversified base of cash flows enables BIP to maintain and increase dividends to shareholders consistently.

The Foolish takeaway

Given an average yield of 6.2%, you will have to invest a total of $161,290 distributed equally in the five TSX stocks to earn $10,000 in annual dividend income. Basically, an investment of $32,258 in the five dividend stocks will help investors generate $2,500 in quarterly dividends or $10,000 in annual dividends.