Earning extra passive income is more important than ever. Inflation has pushed the cost of almost everything up, and any extra income can be a big help.
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Use tax-advantaged accounts to earn more income
Fortunately, Canadians have many tax-advantaged opportunities to invest and grow their wealth. Whether it be the TFSA (Tax-Free Savings Account), RRSP (Registered Retirement Savings Plan), or the RESP (Registered Education Savings Plan), you can accumulate investment income without paying any tax on it.
You can massively boost your overall returns by simply reducing what you would normally pay in tax by using your RRSP. You can also boost returns by picking high-quality stocks that predictably pay dividends. In fact, you could earn $1,800 of passive income per year by investing as little as $36,000 in these three stocks. Here’s how it could work.
An infrastructure stock for elevated passive income
With $12,000, you could buy 271 shares of Pembina Pipeline (TSX: PPL) at $44.25 per share. The company pays a $0.6525 dividend per share every quarter. With a dividend yield of 5.85%, you would earn $176.83 quarterly, or $707.31 annually.
Pembina operates a quality energy infrastructure business across Western Canada. While the company does better when energy prices are elevated, over 85% of its income is contracted. This means it earns a relatively predictable baseline of earnings. This helps to safely back its attractive dividend.
Compared to peers, Pembina has good balance sheet with lower debt. This should provide it flexibility to invest in a variety of expansion projects, including more pipelines and even an LNG export terminal. For a well-managed business with a good dividend yield, Pembina is a good bet today.
A telecom stock for consistent dividend growth
TELUS (TSX: T) is another quality passive-income stock for any Canadian investor. A $12,000 investment could buy 417 shares of this stock at today’s price of $28.73. It earns a 4.95% dividend yield. Your investment would earn $145.95 per share every quarter, or $583.80 per year.
Like Pembina, TELUS is a very defensive stock. This is because it sells services people need and that they must pay on a monthly basis. Internet and cellular coverage are as crucial as water, gas, and power in our modern world.
The great news is that TELUS is not just a telecom company. It is becoming a digital leader in health, customer experience, automation, and even agriculture. This is a key reason why this stock is a lot more than just a passive-income stock. It also doesn’t hurt that TELUS has delivered high-single-digit annual dividend growth for the past 10 years.
A long-term renewable stock for passive income
You can buy 283 units of Brookfield Renewable Partners (TSX: BEP.UN) with $12,000 at today’s price of $43.20 per unit. Brookfield Renewables stock earns a 4.4% dividend yield. With a $0.4575 per unit distribution, your investment would earn $129.47 per quarter, or $517.89 per annum.
The renewable power transition continues to be a very long-term trend. Brookfield Renewables is one of the largest pure-play renewable stocks in the world. For context, today, it operates around 25 gigawatts (GW) of power. However, it has a 110 GW development pipeline that is over four times its current capacity.
This should create plenty of opportunities to keep growing its cash flows and dividends for years and even decades. This is not the cheapest renewable stock, but it is one of the highest-quality green energy stocks.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Pembina Pipeline | 44.25 | 271 | $0.6525 | $176.83 | Quarterly |
| TELUS Corp. | 28.73 | 417 | $0.35 | $145.95 | Quarterly |
| Brookfield Renewable Partners | 42.30 | 283 | $0.4575 | $129.47 | Quarterly |
