For a Shot at $5,000 in Annual Passive Income, Buy This Many Shares of These TSX Stocks

Are you interested in $5,000 in annual passive income? These stocks can help you achieve that.

| More on:
money cash dividends

Image source: Getty Images

For many investors, creating a source of passive income is the goal of their investment portfolios. Ultimately, the goal would be that the portfolio would be able to provide enough income such that the investor wouldn’t need to rely on their job in order to fund their day-to-day expenses. However, that’s a goal that many people may not see for years, if not decades. A more attainable goal in the medium term is to build a source of passive income that could bring you $5,000 annually.

In order to do that, investors will need to identify strong dividend companies that have a history of paying shareholders. It’s important that those companies also offer shareholders a strong dividend yield. Ideally, this would be about 4% or more. Generally, the higher the dividend yield, the less money you’ll have to put up in order to achieve larger amounts of passive income.

In this article, I’ll discuss two great dividend stocks that investors should consider holding today to generate $5,000 of passive income annually.

Start with this dividend payer

The first dividend stock that I think could net investors $5,000 on an annual basis is Bank of Nova Scotia (TSX:BNS). If you live in Canada, you should be very familiar with this company. It is one of the Big Five banks and holds a firm leadership position atop Canada’s banking industry. Bank of Nova Scotia is most notable among that group for its large international presence. Particularly, the company has established a strong presence in the Pacific Alliance, which is expected to grow at a fast rate over the coming years.

Bank of Nova Scotia has been paying shareholders a portion of its earnings since July 1, 1833. Since then, the company has never missed a dividend payment. That represents 190 years of continued dividend distributions. As of this writing, Bank of Nova Scotia offers investors a dividend yield of 7.19%. In my opinion, that’s a very attractive offer that investors should take advantage of.

With an annual dividend of $4.24 per share, investors will need to buy 1,180 shares of Bank of Nova Scotia stock to receive $5,000 of passive income on an annual basis. That equates to an investment of nearly $70,000.

One of Canada’s most prolific dividend companies

Investors should also consider buying shares of Fortis (TSX:FTS) if they hope to receive $5,000 in passive income annually. Fortis is a large multinational company which provides regulated gas and electric utilities to more than three million customers across North America. Because utilities tend to be paid on a recurring basis, Fortis can take advantage of that predictable and stable source of revenue and distribute a reliable dividend to shareholders.

Fortis currently offers investors a forward dividend yield of 4.20%. If you wanted to generate $5,000 in passive income annually, just via Fortis stock, you would need to hold 2,119 shares. That would equate to an investment of more than $118,000. Although that figure is much higher than what investors would need to invest in Bank of Nova Scotia, Fortis’s long history of raising its dividend should make the company very appealing to prospective investors.

StockPrice per ShareAnnual Dividend per ShareShares requiredInvestment Required
Bank of Nova Scotia (TSX:BNS)$59.03$4.241,180$69,655.40
Fortis (TSX:FTS)$55.76$2.362,119$118,155.44
Summary of the figures discussed in this article. Shares required and investment required refer to the total investment needed to receive $5,000 of passive income as of stock prices on November 10, 2023.

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 Jed Lloren has positions in Bank Of Nova Scotia and Fortis. The Motley Fool recommends Bank Of Nova Scotia and Fortis. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Businessperson's Hand Putting Coin In Piggybank
Dividend Stocks

RRSP Ready: 2 Stellar Stocks for Your Annual Contribution

Two high-yield stocks are ideal options if you plan to maximize your annual RRSP contribution limits and reduce taxable income.

Read more »

grow dividends
Dividend Stocks

3 Stocks That Could Be Easy Wealth Builders

Long-term investors would be wise to have these three Canadian stocks on their radar.

Read more »

question marks written reminders tickets
Dividend Stocks

Dividend Investors: Is BCE Stock a Buy Now?

BCE now offers a 7.9% dividend yield.

Read more »

edit Taxes CRA
Dividend Stocks

CRA Money: 2 More Days to Boost Your Tax Refund!

Dividend stocks like Toronto-Dominion Bank (TSX:TD) can be great RRSP holdings.

Read more »

grow money, wealth build
Dividend Stocks

3 TSX Dividend Stocks With Yields Above 7% (But Are They Safe?)

These three dividend stocks all have ultra-high yields, making them some of the best to buy if you're looking to…

Read more »

Light bulb with jester hat perched on top
Dividend Stocks

3 Canadian Dividend Stocks With Payouts That Are No Joke 

Here are three top Canadian dividend stocks long-term investors would be remiss to ignore, particularly at these current valuations.

Read more »

clock time
Dividend Stocks

Is it Too Late to Buy These 3 Brilliant Passive Income Stocks?         

TD Bank stock is just one of three stocks that are well positioned to continue to provide passive income for…

Read more »

rail train
Dividend Stocks

Canadian National Railway Stock: Buy, Sell, or Hold?

Railways like Canadian National Railway (TSX:CNR) are great long-term options. But is now the time to buy Canadian National Railway…

Read more »