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.

| More on:
A worker drinks out of a mug in an office.

Source: Getty Images

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.

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

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 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.

More on Dividend Stocks

hand using ATM
Dividend Stocks

Should Bank of Nova Scotia or Enbridge Stock Be on Your Buy List Today?

These TSX dividend stocks trade way below their 2022 highs. Is one now undervalued?

Read more »

A meter measures energy use.
Dividend Stocks

Here’s Why Canadian Utilities Is a No-Brainer Dividend Stock

Canadian Utilities stock is down 23% in the last year. Even if it wasn’t down, it is a dividend stock…

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Dividend Stocks

Got $5,000? Buy and Hold These 3 Value Stocks for Years

These essential and valuable value stocks are the perfect addition to any portfolio, especially if you have $5,000 you want…

Read more »

Growing plant shoots on coins
Dividend Stocks

3 Magnificent Ultra-High-Yield Dividend Stocks That Are Screaming Buys in April

High yield stocks like BCE (TSX:BCE) can add a lot of income to your portfolio.

Read more »

grow money, wealth build
Dividend Stocks

1 Growth Stock Down 24% to Buy Right Now

With this impressive growth stock trading more than 20% off its high, it's the perfect stock to buy right now…

Read more »

Dividend Stocks

What Should Investors Watch in Aecon Stock’s Earnings Report?

Aecon (TSX:ARE) stock has earnings coming out this week, and after disappointing fourth-quarter results, this is what investors should watch.

Read more »

Freight Train
Dividend Stocks

CNR Stock: Can the Top Stock Keep it Up?

CNR (TSX:CNR) stock has had a pretty crazy last few years, but after a strong fourth quarter, can the top…

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Dividend Stocks

3 Stocks Ready for Dividend Hikes in 2024

These top TSX dividend stocks should boost their distributions this year.

Read more »