There are multiple avenues to start a passive-income stream. However, dividend-paying stocks with fundamentally strong businesses are the cheapest way to earn worry-free passive income. So, for investors planning to build a powerful passive-income portfolio with just $20,000, the TSX offers several high-quality stocks that can help you make regular cash.
Against this backdrop, let’s look at two compelling Canadian stocks that can enable you to start a passive-income portfolio with ease.
A top monthly-paying stock
Stocks offering monthly payouts can be a solid addition to your portfolio to start a steady passive-income stream. Among the monthly-paying stocks, one could consider investing in the shares of SmartCentres Real Estate Investment Trust (TSX:SRU.UN). This fully integrated real estate investment trust (REIT) is famous for its solid dividend payment history.
It owns income-producing assets worth $11.7 billion at strategic locations that help it generate solid cash flows and enhance its shareholders’ returns. SmartCentres pays a monthly dividend of $0.154 per share, reflecting a compelling yield of 7.4% (based on its closing price of $24.74 on August 3).
The key to its solid dividend payouts is its high-quality rental space, including retail and first-class office spaces. Moreover, the REIT also benefits from its solid tenant base. Notably, its tenants provide essential services and have large businesses that add stability to its cash flows. For instance, some of its top tenants are Walmart and Metro. Besides high-quality tenants, its high occupancy rate of 98% bodes well for growth.
Its attractive real estate portfolio, stable financial performance, strong balance sheet, and fixed-rate debt will enable it to generate solid cash, making it a must-have passive-income stock.
A leading energy company
Well-established business, stellar dividend payment history, and ability to increase its quarterly payments in all market conditions make Enbridge (TSX:ENB) one of the best stocks to earn worry-free passive income. This large-cap company owns and operates an energy infrastructure business. In addition, it operates a regulated natural gas utility business and has an ownership interest in renewable energy facilities.
Enbridge has paid a regular dividend for 68 years. Meanwhile, its dividend grew at an average annual growth rate of 10% for over 28 years. The company pays a quarterly dividend of $0.887 a share and offers a lucrative yield of 7.4%.
Its resilient business model, highly diversified income streams, and investments in conventional and renewable assets position it well to generate solid distributable cash flows in all market conditions. Moreover, regulated cost-of-service tolling frameworks and power-purchase agreements support its cash flows.
Looking ahead, the commissioning of its growth projects, ability to generate sufficient self-funding capacity, multi-billion capital plan, and investments in low capital intensity projects bode well for growth and will drive its future payouts.
Bottom line
SmartCentres and Enbridge stock have solid businesses that allow them to consistently pay and increase their payouts. Moreover, these stocks offer a compelling yield of over 7%, making them an attractive investment to start a passive-income portfolio.
| Company | Recent Price | Number of Shares | Dividend Per Share | Total Payout | Frequency |
| SmartCentres REIT | $24.74 | 404.20 | $0.154 | $62.247 | Monthly |
| Enbridge | $48.07 | 208.03 | $0.887 | $184.523 | Quarterly |
Meanwhile, the table shows that if you invest $10,000 in SmartCentres stock, you can earn about $62.247 per month in dividend income. Meanwhile, a $10,000 investment in Enbridge can help you earn a dividend income of approximately $184.523 per quarter, or $61.508 per month.
Collectively, an investment of $20,000 in these stocks will help you make about $123.755 per month.
