How to Create a Passive Income Empire in Canada

Building a passive income empire in Canada is not exclusive to the rich. You only need the right mix of dividend stocks.

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One of the biggest myths of stock investing is that it is only for the wealthy. The claim is false because everyone, young and old, is on equal footing at the starting gate. Moreover, the amount of investible funds is relative as return or profit is the gauge for success, not the capital.

But with the higher cost of living, it would help to create passive income streams to cope with it. The best thing today is that regular folks can access the stock market with minimal capital and build a passive income empire over time. It sounds farcical but it’s true.

The key is owning dividend stocks that have stood or can stand the test of time. Your money should compound faster and grow larger as you accumulate more shares through dividend reinvesting. You can do that with Imperial Oil (TSX:IMO), Capital Power (TSX:CPX), and Canadian Apartment Properties (TSX:CAR.UN).

Anchor stock

American oil giant Exxon Mobil owns 69.6% of Imperial Oil. The $43.8 billion Canadian petroleum company doesn’t pay the highest dividends (2.54%) but packs a mean dividend growth streak, 28 consecutive years of dividend hikes). If you invest today, the share price is $78.87 (+22.1% year to date).

There’s no need to dwell deeper on the financials of the dividend grower. Imperial Oil’s chairman, president and CEO, Brad Corson, said, “As we look to close out 2023, we remain focused on maximizing the value of our existing assets, progressing select growth opportunities, continuing to reduce our carbon intensity and returning surplus cash to shareholders.”

  • We just revealed five stocks as “best buys” this month … join Stock Advisor Canada to find out if Imperial Oil made the list!

New growth drivers

Capital Power is on the pathway to net zero. The $4.3 billion independent power producer has power generating assets (operating, under construction, and development) in Canada and the United States. This utility stock is a dividend aristocrat like Imperial Oil, owing to nine straight years of dividend increases. At $36.43 per share, the dividend yield is 6.75%.

Management recently announced two major deals worth $1.1 billion involving two natural gas power plants in the US. Capital Power will buy CXA La Paloma in Kern County, California. The 50/50 partnership it formed with an affiliate of a fund managed by BlackRock’s Diversified Infrastructure business will buy New Harquahala Generation Co. in Maricopa County, Arizona.  

Robust demand for rental properties

Canadian Apartment Properties is in the same league as Imperial Oil and Capital Power. This $7.6 billion real estate investment trust (REIT) has a dividend growth streak of 11 years. At $44.97 per share, current investors enjoy an 8.08% year-to-date gain in addition to the 3.22% dividend yield.

In Q3 2023, revenues and net operating income (NOI) increased 6.5% and 7.1% to $268.4 million and $178.4 million, respectively, versus Q3 2022. The high 98.9% occupancy rate of the Canadian residential portfolio reflects the robust demand for rental properties.

Its President and CEO, Mark Kenney, disclosed that the REIT acquired newly constructed buildings located in strong-performing, high-growth geographies as part of the portfolio modernization program.   

Make it happen

Building a passive income empire sounds farcical, but it can happen. The key ingredients of this passive income portfolio are a core holding like Imperial Oil, supported by Capital Power and Canadian Apartment Properties.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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