How to Invest $5,000 for Safe Passive Income in 2024

With inflation soaring so much, many Canadians are looking for ways to earn some extra passive income. Investing in stocks is an attractive option for a few reasons.

Stocks are an attractive place to invest and earn passive income

First, you can invest as much or as little as you like. Secondly, stocks only require a small fee to buy and sell. Thirdly, stocks are liquid. If you want to buy and sell, you can do so easily and quickly.

You don’t need a lot of cash to get started. Even just $5,000 can be a great start. In fact, if you are able to defer using the passive income you generate, you can grow that capital by re-investing your dividends.

If you can, take your dividends and re-invest to compound your wealth

If you earned an approximate 4.5% dividend yield and you re-invested your income at a similar yield, your $5,000 could rise by over 50% (to $7,765) in 10 years. That doesn’t factor any capital appreciation into your stocks, either. The key is to start investing quickly, pick good quality businesses, and then re-invest your earnings.

Here are a few stocks you could consider for earning safe passive income in 2024.

A steady, stable, long-term dividend stock

Fortis (TSX:FTS) is one of Canada’s most conservative dividend stocks. If you want a stock for the decades, this might be one. It already has a 50-year record of consecutively increasing its dividend annually.

If you want a low-risk stock with modest growth, Fortis is a good stock. It owns a portfolio of 10 utilities across North America. 99% of its income is regulated, so its results tend to be predictable.

It has a capital plan to spend around $5 billion a year. It expects this could help grow its rate base by an average of 6%. In turn, it hopes to increase its dividend by 4-6% annually going forward.

Fortis stock yields 4.33% today. $5,000 invested in Fortis stock would yield $53.69 of quarterly passive income, or $214.76 annually.

A real estate stock for monthly passive income

Another stock for safe passive income is Granite Real Estate Investment Trust (TSX:GRT.UN). This is an excellent investment if you want real estate exposure but can’t afford an investment property.

In fact, a real estate investment trust (REIT) is an attractive real estate alternative because you get to own the best-quality assets and earn income but have no management responsibility.

Granite operates a large institutional-grade industrial portfolio across Canada, the U.S., and Europe. Industrial has been one of the most resilient asset classes over the past few years.

Granite has a slate of investment-grade tenants, long plus-six-year lease terms, a stellar balance sheet, and a very conservative management team. This REIT has a 13-year history of annually increasing its dividend. It also happens to trade at a discount to its private market value, which means there could be long-term upside in its stock.

This passive-income stock yields 4.4% today. A $5,000 investment in Granite would earn an $18.15 monthly dividend (annualized, which is $217.80 of passive income).