For a Shot at $6,790/Year in Passive Income, Buy 1,908 Shares of This Stock

Enbridge stock is one of the highest yielding TSX stocks available. With 1,908 shares, you can get $6,790 in annual dividend income.

| More on:
Businessmen teamwork brainstorming meeting.

Image source: Getty Images

Do you want to achieve passive income with dividend stocks? If you do, then it pays to look at stocks with long track records of dividend stability. Many stocks have high yields, meaning that they pay you a lot of passive income if things go well. The problem is that with very high yield stocks, things often don’t go well. High yield tends to indicate high risk. If a stock has a high yield, it’s either because the price has been beaten down, or the dividend payout ratio is high. A high payout ratio is a bad thing. A beaten-down stock may be a bad thing if investors are right in their reasons for selling.

Nevertheless, there are some high yield stocks out there that are decent investments. In industries like real estate and pipelines, high yields are the norm – even for high quality assets. In this article, I will explore one high yield stock that could pay you $6,790 in passive income if you buy 1,908 shares.


Enbridge Inc (TSX:ENB) is a Canadian pipeline stock that has a 6.79% dividend yield. The stock pays $0.89 in dividends per quarter, or $3.56 per year. To get $6,790 in dividends per year from Enbridge, you need to buy 1,908 shares.

As you can see, Enbridge’s dividend potential is significant. Its 6.79% yield lets you get substantial income from it even if your initial amount invested isn’t that much. But is the stock a good buy on the whole?

Based on Enbridge’s industry position, it would seem that it is. ENB is one of the biggest pipelines in North America. It has only a small handful of competitors. There are some locations that only Enbridge can ship oil to, so it enjoys even less competition in specific regions than it does overall. Also, Enbridge supplies 75% of Ontario’s natural gas, so it has majority market share in that province.

One thing about Enbridge that isn’t so bullish is its financial strength. It pays out more in dividends than it generates in free cash flow, and it has more debt than it has equity. These things aren’t so pleasant to think about, but the payout ratio isn’t so high that the dividend is at risk of being cut tomorrow.

How much 1,908 shares will cost you

If you like Enbridge as a business and want to use its shares to generate passive income, how much will it cost you?

Here’s the part where a little reality check is in order:

At today’s prices, it will cost about $100,000 to get your 1,908 Enbridge shares. That’s much cheaper than the price you’d pay to get $6,790 per year from passive index funds, but it’s still quite a bit of money to save up.

Foolish takeaway

So, there you have it. It costs $100,000 to get your 1,908 shares of Enbridge and earn $6,790 per year in passive income. You’ll have to save quite a bit of money to pull it off, but it can be done. Of course, you should never invest all of your money into a single high yield stock like ENB. The Motley Fool generally recommends a minimum of 25 stocks in a portfolio. If you build a 25-stock portfolio of high-yielders, including Enbridge, you may be able to get results like those described in this article.

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 Andrew Button has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.

More on Energy Stocks

Oil pumps against sunset
Energy Stocks

Suncor Stock: How Low Could it Go in 2023?

Suncor (TSX:SU) is up on the back of a bounce in oil prices but remains out of favour. Can new…

Read more »

Nuclear power station cooling tower
Energy Stocks

Why Canada Is Investing in Nuclear Power and You Should, Too [PREMIUM ANALYSIS]

Canadian companies are poised to become the global partner of choice for new nuclear technologies.

Read more »

energy industry
Energy Stocks

A TSX Dividend Giant I’d Buy Over Suncor Stock Right Now

Here's why Canadian Natural Resources stock is a much better bet compared to Suncor stock in March 2023.

Read more »

stock research, analyze data
Energy Stocks

Better Buy in April 2023: Bank Stocks or Energy Stocks?

Bank stocks and energy stocks are some of the most sought-after assets, but which is the better buy heading into…

Read more »

grow dividends
Energy Stocks

TSX Energy Index Down 6.6%: How to Take Advantage of the Sell-Off

Investors can focus on generating passive income from three high-yield energy stocks while waiting for oil demand and prices to…

Read more »

Man data analyze
Dividend Stocks

Got $5,000? Buy These 2 Stocks and Hold Until Retirement

If you have $5,000 to invest, here are two TSX stocks you can buy and hold as part of your…

Read more »

Oil pumps against sunset
Energy Stocks

Better Buy: Suncor Stock or Enbridge?

Energy stocks are under pressure. Is Suncor or Enbridge now oversold?

Read more »

Increasing yield
Energy Stocks

Buy the Dip: 1 Blue-Chip Energy Stock With a Rising Dividend Yield

Suncor Energy (TSX:SU) stock is approaching deep-value territory, making it a top pick for Canadian value and income investors.

Read more »