When it comes to creating passive income through dividend stocks, I usually note that there are two types of passive income to consider. Sure, there is the dividend income, but also returns. These together can create a massive amount of passive income, especially in the long run.
However, with this market, I understand if you’re looking for just dividend income. It’s unclear what the next year might hold. So, with that, we’ll look at some practically guaranteed passive income from dividends and from three stocks that aren’t about to cut their payouts.
Getting started
First, you’ll need to identify areas that are going to do well no matter what. And areas that usually provide dividends. For this I would look to industrial real estate investment trusts (REIT), Canadian banks, and exchange-traded funds (ETF) focusing on dividend income.
Industrial REITs continue to do well no matter what’s going on in the markets. Not only that, this is an expanding area that needs more and more properties near major cities around the world. Canadian banks are also seeing a recovery, with inflation coming down and interest rates keeping them afloat.
Finally, if you’re serious about passive income, simply buying a dividend ETF is perhaps the best way to go! This will give you a portfolio of dividend stocks with the click of a button. All for usually quite a low cost.
Three to consider
So, if you’re going to consider these options, these are three I would consider today. First, Granite REIT (TSX: GRT.UN) is perfect for those seeking an industrial REIT. It continues to operate with a 97% occupancy rate and 99% rent collections. That’s what comes from a company that focuses on needing just one large tenant for its massive industrial properties!
As for a bank, a lot of the time, I recommend the largest institution. But if you’re willing to wait for a recovery in share price, Canadian Imperial Bank of Commerce (TSX: CM) offers a drool-worthy dividend right now. The bank is still one of the top three in Canada, and once the housing market recovers is likely to see its share surge once more.
Finally, iShares Canadian Select Dividend Index ETF (TSX: XDV) is one of the best options to consider for monthly passive income. It provides that income from investing in the top dividend stocks on the TSX today. Despite many offering quarterly dividends, it dishes them out monthly!
Creating $1,000
So, let’s say you decide to invest in each of these stocks. Now let’s look at how much it would take to create $1,000 in annul dividend income, or $333.33 each. The XDV ETF holds a 4.81% dividend yield of $1.44 per year. CIBC stock holds a 5.26% yield at $3.60 annually. Finally, Granite REIT has a 4.29% yield at $3.30 per year. Here is what that would mean in terms of investment.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | PORTFOLIO TOTAL |
| GRT.UN | $77 | 101 | $3.30 | $333.30 | monthly | $7,777 |
| CM | $68.65 | 93 | $3.60 | $334.80 | quarterly | $6,384.45 |
| XDV | $27.70 | 231 | $1.44 | $332.64 | monthly | $6,398.7 |
As you can see, it won’t be cheap. You’ll need to invest a total of $20,560.15 as of writing to create that $1,000 in dividend income. That being said, shares continue to climb at a stable click for all three stocks. So, you could end up with far more than just $1,000 in 2024.
