How to Build a Bulletproof Dividend Portfolio Starting With Just $10,000

Want to earn a growing stream of dividend income? Here’s how to invest $10,000 for a great combination of income and growth.

You don’t need a massive amount of capital to start investing for dividend income. In fact, with as little as $10,000, you can build a diversified portfolio that can generate as much as $270 a year of passive income.

If you want to build a bulletproof dividend stock portfolio, here are four stocks to buy with $10,000. While these stocks don’t have high yields, they are growing their dividends substantially every year. They are great bets for capital and income upside.

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CNR: An industrial dividend stalwart

If you have a long investing horizon and want a stock to hold for dividend growth, Canadian National Railway (TSX: CNR) is a great bet. CNR has been a very solid long-term investment. Its stock has returned 240% (including dividends reinvested) over the past decade.

CNR is a very resilient business. It operates a monopoly or duopoly in most of its markets. CN has persistent pricing power and the ability to grow earnings per share by at least a high single-digit rate for the foreseeable future.

CNR stock only yields 1.9%. However, its dividend has been growing at a strong, low-teens rate. Invest $2,500 in CNR, and you’ll earn $11.83 quarterly or $47.32 annually.

ENGH: A software stock with a tonne of cash

Another dividend-growth stock is Enghouse Systems (TSX: ENGH). This company owns and acquires communication and asset management software around the world.

The company provides both on-premises and cloud-based solutions, which provide choice to its customers. Its market segments tend to be low growth, but it makes that up with smart acquisitions.

It generates a lot of excess cash from its businesses. Enghouse has been generating more cash than it even knows how to deploy it. It paid a substantial $1.50-per-share special dividend in 2021.

Despite completing several acquisitions since 2021, Enghouse still sits with approximately $250 million of net cash. It only yields 2.5% today. Yet, it has grown its annual dividend by an 18% average annual rate over the past decade. $2,500 in Enghouse stock would yield $15.62 quarterly or $62.48 annually.

GSY: A growth and dividend story

goeasy (TSX: GSY) is another dividend stock that has also delivered substantial returns over the years. Its stock is up 319% in the past five years.

It provides higher risk but higher return loans to the non-prime consumer segment. The quality and quantity of its loans have been rising over the past several years. As a result, risk has been decreasing while earnings stability has been rising.

goeasy has grown its annual dividend by a 30% compounded annual rate over the past five years. Its payout ratio remains very conservative at about 30%. It yields 2.85% today. A $2,500 investment would earn $17.55 quarterly or $70.20 annually.

BAM: A leading asset manager globally

The final stock for a bulletproof dividend portfolio is Brookfield Asset Management (TSX: BAM). It manages $900 billion of assets and has nearly $500 billion of fee-bearing capital. It is a global leader in alternative investments (infrastructure, renewables, real estate, insurance, and private debt).

Brookfield continues to advance strong fundraising programs. Right now, it has over $100 billion of dry powder to be opportunistic in strategic acquisitions and investments.

Brookfield has a very clean balance sheet. It expects its dividend to grow at the same rate as its earnings growth. It just increased its annual dividend by 19%.

Right now, BAM stock yields 3.7%. Buy $2,500 worth of BAM stock, and you will earn $22.66 quarterly or $90.64 annually.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCY
Canadian National Railway$177.7914$0.845$11.83Quarterly
Enghouse Systems$35.1271$0.22$15.62Quarterly
goeasy$164.3515$1.17$17.55Quarterly
Brookfield Asset Management$55.6344$0.515$22.66Quarterly
Prices as of February 23, 2024

Fool contributor Robin Brown has positions in Brookfield Asset Management, Enghouse Systems, and Goeasy. The Motley Fool has positions in and recommends Enghouse Systems. The Motley Fool recommends Brookfield Asset Management and Canadian National Railway. The Motley Fool has a disclosure policy.

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