Wouldn’t it be nice to generate $1,500 in dividend income every quarter? Just how much do you need to invest today? The dividend yield matters. For example, at writing, TC Energy (TSX:TRP) offers a dividend yield of 6.88%.
To generate $1,500 of dividend income every quarter (or $6,000 every year), you would need to invest about $87,209 in the big-dividend stock. TC Energy pays eligible dividends quarterly.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| TRP | $54.08 | 1613 | $0.93 | $6,000 | 4 |
TC Energy is a blue-chip stock that has paid increasing dividends for 22 consecutive years. Naturally, it earned its place on the Canadian Dividend Aristocrat list. While the dividend yield matters, investors should also care about dividend growth, especially since inflation has been higher recently. Although the large energy infrastructure stock’s 10-year dividend-growth rate is 7.4%, investors should note that its recent dividend-growth rate has been just north of 3%.
Assuming a 6.88% dividend yield and a 3% growth rate going forward, investors can approximate long-term total returns of close to 10% assuming the stock is fairly valued. In fact, at $54.08 per share at writing, analysts believe the undervalued stock trades at a discount of about 12%, which could boost its returns by 2.5% over the next five years.
More than $87,000 in a single stock is quite a large investment, especially for new investors with small portfolios. It would be smart of investors to pick a basket of stocks wisely to diversify their portfolios. The earlier you start investing in dividend-growth stocks at the right price, the less of your savings you would need to put in over time to eventually arrive at dividend income of $1,500 per quarter.
Another large-cap, high-yield stock you can consider on a dip is BCE (TSX:BCE). As a large player in the telecom sector, the blue-chip stock generates substantial operating cash flows that are north of $8 billion annually. Much of that goes into its capital investments for the future growth of the company. However, a portion goes to its quarterly dividend as well.
At $63.15 per share at writing, BCE offers a juicy dividend yield of 6.13%. Like TC Energy, BCE is also a Canadian Dividend Aristocrat. Specifically, the big telecom has increased its dividend for 14 consecutive years with a 10-year dividend-growth rate of 5.2%. Over the years, it has maintained very consistent dividend growth of about 5% per year.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| BCE | $63.15 | 1550 | $0.968 | $6,000 | 4 |
Investor takeaway
TC Energy and BCE both have an investment-grade S&P credit rating of BBB+. Between the two, TC Energy appears to trade at a better discount. However, BCE is expected to experience higher growth over the next three to five years.
If you want to earn $1,500 per quarter across the two stocks equally, you would simply divide the “number of shares” above in two and buy that amount. Again, it’d be better to diversify further into other best Canadian stocks since free trading platforms like Wealthsimple are available and investors don’t need to worry about trading costs anymore.
