If you are searching for passive income in Canada, stocks are a great alternative. Stocks are cheap to buy, and they have a liquid market (meaning you can easily buy and sell them). Stocks give you the opportunity to earn income from dividends.
Likewise, owning a stock in a company also means you get to participate in the upside of a company’s earnings and cash flow. This is also called a capital return.
If you are looking for passive income, Canada is full of attractive dividend-paying stocks. In fact, with a $70,000 investment you could earn nearly $10 per day in passive income. Here’s a four-stock mini portfolio that can demonstrate how this is possible.
A leading infrastructure stock
If you take a quarter of your capital ($17,500), you could buy 385 shares of Pembina Pipeline (TSX:PPL). With a market cap of $25 billion, it is one of western Canada’s largest energy infrastructure businesses. Pembina provides midstream, energy processing, export, and egress infrastructure to Canadian energy producers. Over 85% of its earnings are contracted and that helps fund its attractive 5.67% dividend.
Pembina has excess capacity in its network, so it should be able to earn incremental returns at almost no additional cost over the next few years. In addition, it has a good balance sheet that does not have too much debt. This provides it ample flexibility to invest in new innovative assets, like its proposed Cedar LNG project.
385 shares of Pembina would earn $251 of passive income every quarter. That would equate to $2.75 of income per day.
A top Canadian telecom stock for passive-income growth
TELUS (TSX:T) is another attractive stock for passive income. You could buy 661 shares with $17,500. TELUS stock has recently pulled back, and its valuation looks reasonably attractive at 16 times free cash flow. It also pays an attractive 5.3% dividend today.
TELUS has been one of the best-performing telecommunication businesses over the past five years. The company has made smart capital decisions about expanding its fibre optic network and investing in digital growth verticals. This has helped it delivered outsized customer, earnings, and dividend growth.
661 shares in TELUS would earn $231.35 of passive income every quarter. That would average $2.54 per share on a daily basis.
A leader in renewable power
With a market cap of about $30 billion, Brookfield Renewable Partners (TSX:BEP.UN) is one of the largest pure-play renewable stocks in the world. The company is a leader in renewable development and operations.
It has an enviable hydropower portfolio that is complemented by a host of wind, solar, distributed generation, and battery power assets. It recently announced the acquisition of a large stake in one of the world’s foremost nuclear services companies.
A $17,500 investment could buy 459 shares of Brookfield Renewable. With a 4.76% dividend yield today, that investment would earn $211.14 of passive income every quarter. Averaged across the year, that would equal $2.31 per day.
A top real estate stock for passive income
Real estate can be a great way to earn consistent passive income, because landlords collect rental income monthly. One of my favourites in this sector is Dream Industrial REIT (TSX:DIR.UN). Over the past several years, industrial real estate has been a very strong asset class.
E-commerce, elevated inventories, and near-shoring manufacturing are pushing high demand and rental rate growth for industrial properties. Dream grew its cash flow per unit by over 9% last year, and it expects to do just as well in 2023.
A $17,500 investment would buy 1,228 units of Dream Industrial. That would earn $71.63 of passive income monthly. That would equal $2.36 of average daily passive income.
|COMPANY||RECENT PRICE||NUMBER OF SHARES||DIVIDEND||TOTAL PAYOUT||FREQUENCY|
|Brookfield Renewable Partners||38.12||459||$0.46||$211.14||Quarterly|
|Dream Industrial REIT||14.25||1,228||$0.05833||$71.63||Monthly|