A passive-income portfolio is an investment portfolio that focuses on investments that will bring in the most passive income. That usually comes in the form of dividends, though, of course, you want returns as well. You don’t want to miss out on returns in favour of dividends, after all.
But when it comes to creating the perfect passive-income portfolio from Canadian stocks, you need to think of sectors. Today, we’re going to look at three sectors and dividend stocks that should provide years of passive income.
Utilities
Utilities are some of the best choices for a passive-income portfolio. After all, we need utilities to power our homes and businesses — pretty much every aspect of life! That’s why these dividend stocks tend to do so well. They’re powered by long-term contracts, using their revenue to acquire more business and increase dividends.
That’s why a top choice right now would be Fortis (TSX: FTS). The company recently hit headlines as it’s now a Dividend King, with 50 years of consecutive dividend increases set to be delivered next month. The utility company has a solid strategy across its North American businesses: growth, acquire, and repeat.
Shares of Fortis stock are up 4.51% in the last year, with a dividend yield currently at 4.33%. So, you can lock up this stock with stable returns, even in an economic downturn, and look forward to passive income still coming in.
Infrastructure
Another strong choice for a passive-income portfolio is dividend stocks in the infrastructure sector. Just like utilities, these provide stable revenue from long-term contracts. They also provide stable income as these are essential parts of our everyday lives — whether it’s the roads you’re taking to work or the sewer lines outside your home.
That’s why Aecon (TSX: ARE) is a solid option among dividend stocks. Aecon stock continued to beat its earnings estimates after quarter after quarter of doing this. The thing is, shares dropped as the company stated it’s looking to close four legacy projects that are hindering revenue potential. Yet it now has a $6.2 billion backlog waiting to get up and running, creating long-term success.
Shares of Aecon stock are still up about 2% in the last year, with an incredible dividend yield of 7.02% as of writing.
Essential software
Finally, it might not seem like software could be essential. But think about it. What’s running the subways, airports, and businesses in general these days? It’s software. As boring as it might be, or as risky as it might seem, there are companies creating essential software or acquiring the businesses behind them.
One such company is Constellation Software (TSX: CSU), which has created immense success over the last few decades. Yes, decades. That’s another benefit of Constellation stock, as it’s one of the few tech stocks that actually has a history showing you can depend on it for passive income.
While the stock doesn’t have a huge dividend yield at 0.20%, you can certainly look forward to solid passive income through returns. That remains true today, with shares up 41% in the last year alone!
Bottom line
Follow these three stocks, and you’ll have a solid passive-income portfolio for life.
