How to Build a Portfolio With Big Passive Income

Canadians can construct a portfolio that delivers big on passive income by targeting equities like Timbercreek Financial Corp. (TSX:TF).

| More on:
dividends grow over time

Source: Getty Images

The establishment of a consistent and sizable passive-income stream should be a goal for all long-term investors. Of course, there are many ways to make passive income. For example, a homeowner could establish a passive-income stream if they are able to collect rent from their property. Moreover, Canadians could theoretically make passive income if they write a successful e-book.

Today, I want to explore how to build a passive-income portfolio with some of the top dividend stocks on the TSX. In this scenario, I want to stash our dividend stocks in a Tax-Free Savings Account (TFSA). We will use about half of the total contribution room available: $44,000. Let’s dive in.

Here’s the first stock I’d suggest to start our passive-income portfolio

Timbercreek Financial (TSX:TF) is a Toronto-based mortgage investment company that provides shorter-duration structured financing solutions to commercial real estate investors in Canada. Shares of this dividend stock have increased 1.2% month over month as of close on Wednesday, June 21. The stock is up 3.1% so far in 2023.

This company released its first-quarter fiscal 2023 earnings on May 8. Timbercreek achieved record net investment income of $32.7 million — up 44% compared to the first quarter of fiscal 2022. Meanwhile, it posted record net income of $18.1 million. The company took advantage of improved interest income and its strong mortgage portfolio.

Shares of Timbercreek closed at $7.52 per share on June 21. For our hypothetical, we can snatch up 1,940 shares of Timbercreek for a purchase price of $14,588.80. The stock currently offers a monthly dividend of $0.058 per share. That represents a superb 9.1% yield. This purchase will allow us to generate monthly passive income of $112.52 going forward.

This REIT can generate big passive income going forward

SmartCentres REIT (TSX:SRU.UN) is a Toronto-based real estate investment trust (REIT) that focuses on acquiring value-oriented retail space across Canada. Its shares dripped 2.14% in yesterday’s trading session. The stock has found itself in the red in the year-to-date period.

The REIT closed at $24.13 per share on Wednesday, June 21. For our hypothetical, we can snag 600 shares of SmartCentres REIT for a total price of $14,478. This stock last paid out a quarterly dividend of $0.154 per share, which represents a very tasty 7.6% yield. The purchase will let us churn out monthly passive income of $92.40 in our portfolio.

One more monthly dividend stock that can round out our portfolio

Sienna Senior Living (TSX:SIA) is a Markham-based company that provides senior living and long-term-care (LTC) services in Canada. This dividend stock has climbed marginally over the past month. Its shares have climbed 3.7% in the year-to-date period.

Shares of Sienna Senior Living closed at $11.45 on Wednesday, June 21. We can snatch up 1,300 shares of Sienna Senior Living to round out our passive-income portfolio at the beginning of the summer of 2023. The stock currently offers a monthly distribution of $0.078 per share, representing a monster 8.1% yield. This purchase will let us generate monthly passive income of $101.40.

Bottom line


Our passive-income portfolio will be able to churn out monthly payouts of $306.32 with these purchases. That works out to an annual passive income payout of $3,675.84.

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 Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool recommends SmartCentres Real Estate Investment Trust. The Motley Fool has a disclosure policy.

More on Investing

oil and gas pipeline
Dividend Stocks

Is Enbridge Stock a Buy for its 7.6% Dividend Yield?

Enbridge stock is a TSX giant that offers investors a tasty dividend yield of 7.6%. Is this high-dividend stock a…

Read more »

Early retirement handwritten in a note
Dividend Stocks

Retire Early With These 3 Canadian Passive-Income Stocks

Three Canadian passive-income stocks are smart choices for people with early retirement goals.

Read more »

Businessperson's Hand Putting Coin In Piggybank
Energy Stocks

This 7 Percent Dividend Stock is My Top Pick for Immediate Income

Looking for a solid dividend stock that can provide an immediate income source? Consider this dividend gem now while its…

Read more »

man sitting in front of 3 screens programming
Tech Stocks

Shopify Stock or Microsoft Shares: Better Buy for the AI Revolution?

Shopify (TSX:SHOP) and Microsoft (NASDAQ:MSFT) are two of the most impressive growth stocks to watch, as tech slips further from…

Read more »

Young woman sat at laptop by a window

2 Stocks to Buy That Canadians Interact With Every Day

BCE and Enbridge are industry leaders that provide essential services that homes and businesses need, regardless of the state of…

Read more »

Dividend Stocks

3 Dividend Deals You Won’t Want to Miss

Given their solid underlying businesses and stable cash flows, I believe three dividends stocks would be an excellent addition to…

Read more »

A worker gives a business presentation.
Dividend Stocks

For 6% Yields, Buy These 3 TSX Stocks Now

Companies like Enbridge offer high yields and are focused on elevating their shareholders’ value by bolstering dividend distributions.

Read more »

protect, safe, trust
Dividend Stocks

How to Invest $10,000 Today for Decades of Safe Passive Income

Want to earn safe and predictable passive income? Here are some ideas on how to invest $10,000 and earn +$400…

Read more »