Quality dividend stocks on the TSX, such as Brookfield Renewable Partners (TSX:BEP.UN), Toronto-Dominion Bank (TSX:TD), and Canadian Utilities (TSX:CU) can help you earn a passive-income stream due to their high dividend yields. Further, each of these companies should keep increasing dividend payouts over time, increasing the effective yield significantly.
Let’s see how to earn $1,000 in safe annual dividend income by investing in these three blue-chip TSX stocks.
Brookfield Renewable Partners stock
Brookfield Renewable currently offers investors a dividend yield of 5%. Down 43% from all-time highs, the TSX stock has still returned 1,700% to shareholders after adjusting for dividends.
A clean energy giant, Brookfield Renewable sells electricity under long-term PPAs, or power-purchase agreements, to its base of customers, which include electric utility companies and other corporate buyers.
Brookfield Renewable currently has a capacity of 32 gigawatts across assets such as hydro, wind, solar, and distributed generation. It expects to increase the pipeline of assets by another 132 gigawatts, which is enough energy to power 18 million homes annually.
Its PPAs are indexed to inflation, making the company’s cash flows predictable. BEP expects its development pipeline and inorganic growth to allow it to increase earnings by 10% annually through 2027.
Brookfield Renewable has also invested $8 billion in the last 12 months, which should allow it to improve cash flows in 2023 and beyond.
Toronto-Dominion Bank stock
Similar to other big Canadian banks, Toronto-Dominion Bank enjoys an entrenched and protected business environment. The Canadian banking industry is highly regulated, allowing TD and its peers to maintain healthy balance sheets and pay dividends across market cycles.
TD Bank stock pays shareholders an annual dividend of $3.84 per share, translating to a forward yield of 4.44%. Priced at 10.3 times forward earnings, TD stock also trades at a discount of 8% to consensus price target estimates.
The banking heavyweight has one of the highest tier-one capital ratios in North America, which is a measure of a bank’s ability to withstand an economic downturn. It has also gained traction in the U.S., the world’s largest economy.
Canadian Utilities stock
The final TSX dividend stock on my list is Canadian Utilities. With over $23 billion in assets, Canadian Utilities pays shareholders an annual dividend of $1.79 per share, indicating a generous yield of 5.75%.
Canadian Utilities is part of a recession-resistant sector, allowing it to increase dividends each year for 51 consecutive years, the largest streak for a Canadian company. It invested $332 million in capital expenditures in the June quarter, which should drive future cash flows and dividends higher.
Priced at 14 times forward earnings, CU stock trades at a discount of 23% to consensus price target estimates. After including dividends, total returns will be closer to 28% in the next 12 months.
The Foolish takeaway
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Brookfield Renewable Partners | $86.40 | 186 | $0.45 | $83.7 | Quarterly |
| TD Bank | $86.40 | 77 | $0.96 | $73.92 | Quarterly |
| Canadian Utilities | $31.22 | 213 | $0.449 | $95.63 | Quarterly |
For you to earn $1,000 in annual dividends, you need to invest a total of $20,000 distributed equally in these three stocks. Moreover, your annual dividend payout may double in the next seven years if the companies increase dividends by 10% annually.
