How to Build a Rock-Solid Passive-Income Portfolio With Just $30,000

A passive-income portfolio that you hope to rely upon for years, if not decades, should be built with Aristocrats, or your passive income could succumb to inflation.

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When most investors think of a rock-solid passive-income portfolio, the first thing that comes to mind is investment property.

There are few investments as solid and tangible as hard assets (real estate), but their income potential is not as generous as it’s often propped up to be, especially when you factor in the time commitment and cost of maintenance to the equation. There is also a significantly high barrier to entry.

The right dividend stocks, however, can help you build a rock-solid passive-income portfolio with far less capital.

A utility stock

If you are looking for a reliable dividend stock based on history, the very first name that should come to your mind is Canadian Utilities (TSX:CU), the only Dividend King in Canada.

It has raised its payouts for over 50 consecutive years. It’s currently offering dividends at a healthy 5.7% yield, which is higher than usual thanks to the 24% discount it’s trading at. The discount, coupled with an attractive valuation, is also a compelling reason to consider this stock.

But even if we stick to dividend reliability, its history is not the only endorsement. It’s a utility company, and thanks to the stable nature of their revenue (utility bills), the dividends are quite financially sustainable and sheltered from weak economic conditions and market forces that may force other companies to cut their dividends.

The financial sustainability of the dividends is also reflected in the payout ratio of 82%.

A bank stock

When it comes to passive income, Canadian bank stocks are a common choice. They have been paying dividends for decades, some of them for centuries, and most have established themselves as trustworthy Aristocrats. Bank of Nova Scotia (TSX:BNS) is currently one of the most generous dividend stocks in the banking sector, thanks to its massive 34% discount that has pushed its yield up to 6.9%.

The current payout ratio of 72% is relatively high for a Canadian bank, but it’s unlikely that it would lead to a dividend suspension, let alone a dividend cut. Plus, the discount makes it appealing from a recovery perspective as well, which can lead to decent capital-appreciation potential. The valuation is another reason to consider adding this stock to your portfolio.

A telecom giant

Telus (TSX:T) is the second largest telecom giant in Canada by market cap and one of the best 5G stocks in Canada. It’s also quite heavily discounted right now and trading at a 28% lower price point compared to its 2022 peak. Considering its performance in the past 30 days, the slump may be over, which would make it a perfect time to lock in the generous 6.1% yield.

While Telus doesn’t stand out in the sector when it comes to its 5G penetration, it’s still well-positioned to benefit from an Internet of Things (IoT) revolution that has the potential to introduce millions of new devices in Canada that would rely upon telecom companies like Telus for their operations. It’s also expanding its business portfolio in other dimensions, particularly IT and telehealth.

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Foolish takeaway

At $10,000 each (and $30,000 collectively), the three stocks can produce a monthly income of about $155. As all three companies are Aristocrats that have been growing their payouts for well over a decade, this income is not just rock solid; it’s also adequately inflation-resistant.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Bank Of Nova Scotia and TELUS. The Motley Fool has a disclosure policy.

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