Got $15,000? How to Invest for a Bulletproof Passive-Income Portfolio

Given their stable cash flows and healthy growth potential, these three dividend stocks could bulletproof your passive income.

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Although global equity markets have turned volatile amid geopolitical tensions, investors can bulletproof their passive income by investing in quality dividend stocks. One can earn over $1,000 yearly by investing around $5,000 in each of these three TSX stocks. Let’s look at these stocks in detail.


Pizza Pizza Royalty

Pizza Pizza Royalty (TSX:PZA) is one of the top dividend stocks to have in your portfolio due to its risk-free franchised business model and intent to pay all available free cash flows to its shareholders. The company operates most restaurants through franchisees and collects royalties based on their sales. So, rising commodity prices and wage increases will not impact their financials much, thus generating stable and predictable cash flows.

Supported by these healthy cash flows, PZA has rewarded its shareholders with healthy dividend yields. With a monthly dividend of $0.0775/share, it offers a juicy forward dividend yield of 6.95%.

Further, PZA has expanded its store network by adding 45 new stores to its royalty pool since the beginning of this year. Besides, it is constructing new restaurants and hopes to increase its traditional restaurant count by 3 to 4% this year. Along with these restaurant expansion initiatives, positive same-store sales growth amid new product launches and marketing initiatives could boost its sales, thus allowing it to continue paying dividends at attractive rates.

TC Energy

Another top dividend stock that I am bullish on would be TC Energy (TSX:TRP), which has been raising its dividend since 2000 at an annualized rate of 7%. The midstream energy company earns around 97% of its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) from regulated assets and long-term contracts. So, its financials are less susceptible to commodity price fluctuations, generating healthy cash flows and allowing it to raise its dividend consistently. Meanwhile, it currently pays a quarterly dividend of $0.96/share, with its forward yield is at 7.78%.

Meanwhile, this year, TC Energy has planned to invest around $8 to $8.5 billion and hopes to put around $7 billion of projects into service. Besides, it is also strengthening its balance sheet by selling non-core assets. It is currently working on divesting several assets and is on course to produce $3 billion this year. The net proceeds from asset sales could aid the company in lowering its debt levels and interest expenses in this high-interest environment, thus driving its free cash flows. Given its improving financial position, stable cash flows, and high yield, I believe TC Energy would be an excellent buy.


My final pick would be Telus (TSX:T), which has returned $25 billion to its shareholders since 2004 through dividends and share repurchases. Besides, the company has raised its dividends 25 times since 2011 and currently offers an attractive yield of 6.84%. Meanwhile, the company has been under pressure over the last 12 months amid rising interest rates and unfavourable regulatory decisions. However, given its stable cash flows and high yield, I believe the correction offers an opportune entry point for income-seeking investors.

Telecom companies generate healthy cash flows due to their recurring revenue streams. Besides, high initial investments and regulatory approvals have created an entry barrier for new entrants, thus allowing existing players to enjoy their market share. Further, digitization and growth in remote working and learning have increased the demand for telecommunication services, creating multi-year growth potential for Telus. Amid the recent correction, the company’s valuation looks attractive, with its NTM (next 12 months) price-to-sales multiple at 1.6

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 Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends TELUS. The Motley Fool has a disclosure policy.

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