How to Invest $10,000 This Year to Create Ultra-Safe Passive Income

Blue-chip utility stocks such as Fortis can help income-seeking investors create a stable stream of passive income in 2023.

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An elevated pricing environment allowed energy stocks to deliver record profits in 2022. Several energy stocks also raised dividends to distribute these profits to shareholders, making them attractive to income-seeking investors.

While energy prices have cooled off in recent months, valuations have also moved lower year to date. But demand for fossil fuels and renewable energy sources is expected to remain steady over the long term, making these companies top bets in April 2023.

So, here are three stocks where you can invest $10,000 right now to create a stream of ultra-safe passive income.

Fortis stock

A Canada-based dividend giant, Fortis (TSX:FTS) offers investors a tasty dividend yield of 3.8%. With a market cap of almost $30 billion, Fortis owns and operates 10 independent utilities in North America. It is a Dividend Aristocrat and is on track to become the second Dividend King in Canada by raising dividends for 50 consecutive years in 2023.

Fortis is a recession-resistant company and is a solid, defensive bet for investors in an environment that is volatile, to say the least.

Additionally, Fortis holds contracted assets that consist of three hydroelectric generating facilities with a capacity of 51 megawatts as well as a natural gas storage facility. It owns and operates 90,200 kilometres (km) of distribution lines and 51,200 km of natural gas pipelines.

Fortis continues to expand its base of cash-generating assets which should support dividend hikes in the future too.

Duke Energy stock

An electric utility giant, Duke Energy (NYSE:DUK) serves 8.2 million customers in the Carolinas, Florida, Ohio, Kentucky, and Indiana. Its natural gas unit also serves 1.6 million customers south of the border.

The company expects to grow earnings between 5% and 7% annually through 2027, which should support dividend hikes in the near term. Currently, DUK stock offers investors a dividend yield of 4%, and the payouts have risen by almost 4% annually since April 2003.

After adjusting for dividends, Duke Energy stock has returned more than 1,000% to investors in the last 20 years, easily outpacing the broader indices.

Brookfield Renewable Partners

The final stock on my list is Brookfield Renewable Partners (TSX:BEP.UN), which offers you a yield of 4.5%. It owns and operates hydroelectric facilities, solar facilities, and wind farms, with its power-generation capacity totaling over 22 gigawatts. The company is on track to add another 110 gigawatts to its portfolio as it rapidly gains traction in the utility-scale solar power vertical.

In the last 24 years, BEP stock has returned 16% annually, generating inflation-beating gains for shareholders. The worldwide shift towards clean energy solutions and its robust development pipeline make BEP stock an enticing bet in 2023.

The Foolish takeaway

It might seem quite boring to invest in utility stocks, but these companies generate predictable cash flows that are regulated, allowing them to pay dividends to shareholders across market cycles.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCY
Fortis Inc.$59.6756$0.565$31.6Quarterly
Duke EnergyUS$99.7425US$1.005US$25Quarterly
Brookfield Renewable Partners$41.0881$0.4575$37Quarterly

An investment of $10,000 distributed equally in these three stocks will allow investors the opportunity to earn over $400 in annual dividends. In case these payouts increase by 7% each year, your dividends will double within the next decade.

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 Brookfield Renewable Partners and Fortis. The Motley Fool recommends Brookfield Renewable Partners, Duke Energy, and Fortis. The Motley Fool has a disclosure policy.

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