How to Easily Turn $10,000 Into $525 of Annual Passive Income

Buying and holding stocks is a good way to generate extra passive income. Unlike other passive-income investments, like a small business, an investment property, or even GICs (Guaranteed Investment Certificates), stocks are liquid and cheap to buy and sell.

Now, this does also mean stocks can be volatile. However, that can create great opportunities to pick up beaten-up stocks with attractive yields. If you have $10,000 to invest today, here’s an easy four-stock portfolio that could earn as much as $525 of passive income a year.

A top stock for passive-income growth

With a $37.6 billion market cap, TELUS (TSX: T) is one of Canada’s largest telecommunication providers. While recent mergers are making the Canadian communication sector more competitive, TELUS is differentiated by its strong network and its diversified digital services businesses.

At writing, TELUS stock yields 5.6%, which is above its five-year average of 4.85%. TELUS has grown its annual dividend by over 8% per annum on average. The company is completing a large capital cycle and expects to earn a large amount of excess cash. That means more dividend increases could be on their way.

Put $2,500 into TELUS stock, and you could earn $34.80 every quarter, or $139.20 annually.

The best passive-income stocks if you like real estate

If a rental or income property is just out of reach, you can still own extremely high-quality investment properties through real estate investment trusts (REITs). Two of my favourite stocks for monthly passive income are Dream Industrial REIT (TSX: DIR.UN) and BSR REIT (TSX: HOM.UN)

Dream operates 321 logistics, warehousing, and distribution properties across Canada and Europe. It also manages two joint venture partnerships. Industrial real estate has been one of the most resilient asset classes over the past five years.

Demand is high in Dream’s core cities, and it has been seeing double-digit rental rate growth. This has translated into +9% adjusted funds from operation (AFFO) per unit growth over the past few years.

Right now, Dream yields 4.95%. Put $2,500 into its stock, and you would earn $10.21 monthly, or $122.50 of passive income annually.

BSR REIT operates a portfolio of resort-style apartment complexes across Texas and Oklahoma. Its properties are strategically located in some of the fastest-growing jurisdictions in the United States. That has been a major tailwind for supporting high occupancy and strong rental rate growth.

At writing, BSR trades at a 40% discount to its net asset value, so you are buying the portfolio at a significant discount to its private market value. The REIT trades with a 4% distribution yield. A $2,500 investment would earn $8.40 of monthly passive income, or $100.74 annually.

An energy infrastructure stock with a high yield

If you are looking for a safe passive-income stock with an elevated dividend, Pembina Pipeline (TSX: PPL) could be a solid pick. It operates a mix of pipelines, gas processing plants, export terminals, and energy marketing businesses. Its dividend is entirely covered by its contracted sources of income.

Pembina has an industry-leading balance sheet, which should provide it flexibility in deploying capital into growth opportunities (LNG export terminal, pipeline expansions and acquisitions). You may have to be patient for this strategy to unfold, but its 6.4% dividend yield compensates you while you wait.

Invest $2,500 into Pembina stock, and you would earn $40.71 quarterly, or $162.87 annually.