How to Build a Powerful Passive-Income Portfolio With Just $20,000

These fundamentally strong TSX stocks have paid and increased their dividend in all market conditions. Add these stocks to build a reliable passive-income portfolio.

| More on:
analyze data

Image source: Getty Images

Investors planning to build a powerful passive-income portfolio could consider investing in shares of dividend-paying companies with fundamentally strong businesses and a solid history of paying and raising their payouts in all market conditions. While the TSX has many dividend-paying stocks, I’ll focus on companies with well-established businesses and a growing earnings base, which will drive their future distributions. 

So, even if you have just $20,000, consider investing in these Canadian stocks, which can help you build a reliable passive-income portfolio.


Enbridge (TSX:ENB) is, without a doubt, a must-have stock to create a passive income portfolio, and there are solid reasons for it. This oil and gas transportation company has a resilient business model, benefits from its diversified revenue base, and has paid and increased its dividend in all market conditions for decades. For instance, Enbridge has paid dividends for nearly 69 years and raised the quarterly dividend for 29 consecutive years. Further, it offers an impressive yield of 7.88%, while its payout ratio of 60 to 70% of distributable cash flow (DCF) is sustainable in the long term. 

Enbridge’s highly diversified income stream, high asset utilization rate, and power-purchase agreements help generate solid distributable cash flows that cover its dividend payouts. Further, this energy infrastructure company benefits from its low-risk commercial arrangements, long-term contracts, and regulated cost-of-service tolling frameworks to stabilize its cash flows. 

Looking ahead, Enbridge’s ongoing investments in conventional and renewable energy assets, multi-billion-dollar secured capital projects, and strategic acquisitions position it well to capitalize on the energy demand, supporting its growth and future dividend payments.


Fortis (TSX:FTS) is another stock with an attractive track record of dividend payments and growth that can help investors generate income regardless of economic situations. Fortis has increased its dividend for 50 consecutive years and offers a well-protected yield of 4.53%.

Fortis operates a defensive, regulated electric utility business that generates predictable and growing cash flows. Its diversified regulated utility asset base accounts for all its earnings, implying its payouts are well covered. This stability makes Fortis a worry-free income stock. 

Meanwhile, the utility company is focusing on growing its rate base, enabling it to enhance shareholders’ returns through higher dividend payments. Fortis plans to expand its rate base at a compound annual growth rate (CAGR) of 6.3% through 2028. At the same time, the company is confident of raising its dividend at an annualized rate of 4 to 6%. Its low-risk business, solid dividend payment history, and visibility over future payments make it a compelling investment. 

Toronto-Dominion Bank

I’ll wrap up with financial services giant Toronto-Dominion Bank (TSX:TD). Impressively, Toronto-Dominion has consistently paid dividends for 167 years. Further, it has raised dividends at a CAGR of about 10% since 1998, making it an excellent investment to start a growing passive income stream. 

Its growing earnings base supports the dividend payouts. The bank’s diversified revenues, high-quality assets, strong balance sheet, and improving efficiency enable it to consistently deliver strong earnings. Moreover, its payout ratio of 40 to 50% is low and sustainable in the long term.

Looking ahead, its growing loans and deposit base, strong credit quality, and efficiency improvement will cushion its earnings. Investors can also earn a reliable yield of 5.05% by investing in Toronto Dominion Bank stock. 

Bottom line 

These three dependable dividend stocks can create a powerful passive income portfolio for investors. On average, these companies offer a dividend yield of 5.82%, implying one can earn a passive income of $1,164/year by investing $20,000 equally in these three stocks.

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 Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge and Fortis. The Motley Fool has a disclosure policy.

More on Dividend Stocks

protect, safe, trust
Dividend Stocks

How to Earn Safe Dividends With Just $10,000

Earn reliable income with relatively safe stocks like Fortis.

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

2 Dividend Stocks to Beat Inflation

These two TSX dividend stocks can be excellent holdings to beat inflation, even as inflation cools down.

Read more »

dividends grow over time
Dividend Stocks

TFSA: Invest $20,000 and Get $860/Year of Predictable Passive Income

Looking for safe passive income that will grow and build wealth inside your TFSA. Check out this four-stock portfolio of…

Read more »

Increasing yield
Dividend Stocks

3 Overlooked High-Yielding Dividend Stocks to Buy Right Now

These three dividend stocks are excellent buys, given their discounted prices and high yields.

Read more »

Dad and son having fun outdoor. Healthy living concept
Dividend Stocks

Married? Have Kids? Grab These 5 CRA Tax Breaks

You can transfer dividend income from stocks like Suncor Energy Inc (TSX:SU) to your spouse and enjoy tax savings that…

Read more »

You Should Know This
Dividend Stocks

Why Claiming CPP at 65 Could Be a Mistake

The CPP pegs the start retirement age at 65, but it's not necessarily the ideal option to start pension payments.

Read more »

dividends grow over time
Dividend Stocks

1 Passive-Income Stream and 1 Dividend Stock for $235.30 in Monthly Cash

The easiest way of creating passive income comes from from something you have to do anyway. Add in dividend income,…

Read more »

edit CRA taxes
Dividend Stocks

CRA: This Tax Break Can Help You Save Serious Money in 2024

This tax credit is one you've likely missed in the past but could provide you with thousands each year! So,…

Read more »