These Canadian Dividend Stocks Are a Great Way to Create Passive Income

High-yield dividend stocks like Canadian Imperial Bank of Commerce (TSX:CM) can add a lot of passive income to your portfolio.

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High-yield dividend stocks are among the best assets you can buy if you’re looking for passive income. The stock market as a whole pays out passive income in the form of dividends, but the TSX index only yields 3%, which is far less than what you can get in treasury bills these days. If you really want to collect regular, passive income with stocks, you need to look into dividend payers.

That’s not to say that high-yield investing is a one-way ticket to riches. It’s not. High-yield stocks are usually riskier than low-yield stocks, all other things the same, because companies with high yield are often spending too much of their profit on paying dividends. However, high-yield investing can work, if you buy quality stocks like the ones listed below.


Canadian Imperial Bank of Commerce (TSX:CM), hereafter referred to as CIBC, is a large Canadian bank. It is part of the “Big Six” banks that dominate Canadian financial services.

CIBC is not as international as some of Canada’s other big banks. It does have some U.S. operations, but they are not overly large as a percentage of the whole.

What CIBC lacks in size, it makes up for in yield. CIBC hasn’t grown much over the last five years, growing revenue at just 4% CAGR and earnings at just 0.68% CAGR. As a result of this tepid growth, its stock has fallen out of favour compared to bigger Canadian banks. So, now, the stock has a 6% dividend yield, making it a high-yield dividend stock.

It’s a tempting yield — without a doubt. However, this high-yield dividend stock comes with certain risks as well. The company has been criticized for poor risk management, having lost $3 billion in the U.S. subprime mortgage meltdown. It is what it is, but buying CM today will give you a lot of passive income.


Enbridge (TSX:ENB) is a high-yield dividend stock that yields 6.7%. If you invest just $100,000 into ENB, you’ll get $6,700 back each year in passive income.

What does Enbridge do as a company?

Mainly, it transports crude oil all around North America. It also has a smaller natural gas utilities business, which supplies 75% of Ontario’s natural gas. On the whole, Enbridge is a vital component of North America’s energy infrastructure.

There are some aspects of ENB stock that I’m not thrilled about. For one thing, its payout ratio is high, meaning that it pays more in dividends than it earns in profit or free cash flow. For another thing, it has an extraordinarily high amount of debt. It may not be the safest energy stock out there. But it’s got income potential for now.

First National

First National Financial (TSX:FN) is a Canadian non-bank mortgage lender. Like banks, it loans people money so they can buy houses. Unlike banks, it doesn’t take deposits, but funds its loans from various balance sheet assets. These assets can’t just be “withdrawn” like deposits can, so First National arguably faces less balance sheet risk than a typical bank does. FN’s recent results seem to have supported this notion. In 2022, it delivered positive growth in both revenue and earnings. It’s a 6.15% yielder with a lot of potential.

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.

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