How to Earn Safe Dividends With Just $10,000

These two top stocks are some of the highest-quality businesses in Canada, making them ideal investments for safe and reliable dividends.

| More on:
Canadian Dollars

Image source: Getty Images

Accumulating $10,000 for investment is no small achievement. While this sum may appear modest—merely a fraction of what’s needed to purchase a home or even a brand-new car—it is, in fact, an excellent starting point for Canadians eager to venture into investing and secure safe and attractive returns through dividends and capital gains.

To invest your money safely and generate consistent returns, there are two fundamental rules to follow.

First, it’s crucial to choose only high-quality stocks in sectors you understand well. This ensures a clear grasp of the business models you are investing in. Second, diversification is key. Spreading your investments across a variety of companies minimizes risk and enhances the potential for stable returns.

Therefore, starting with $10,000 is an ideal amount, as it gives you plenty of cash to find many different high-quality dividend stocks.

So, with that in mind, if you’ve got some cash you’re looking to put to work today, here are two high-quality companies that you can have confidence buying and holding in your portfolio and which can earn you safe and significant dividends for years.

One of the top Canadian stocks to buy for safe and reliable dividends

If you’re looking to invest your hard-earned money and want to buy a company that’s as safe and reliable as possible, utility stocks are an excellent choice. The majority of utility stocks are ultra-safe and recession resistant.

However, there’s no question that one of the very best Canadian stocks to buy for safe dividends is Fortis (TSX:FTS), the largest investor-owned gas and electric distribution utility in Canada.

The reason why utility stocks are well-known as some of the safest and most reliable businesses you can invest in is the fact that they offer services which are essential. These services, such as gas and electricity distribution, see very little impact from a weakening economy, making utility stocks some of the most recession-resistant businesses you can buy.

Furthermore, the industry is highly regulated by governments, making the revenue, earnings and, consequently, the dividend that these stocks will pay highly predictable.

Not to mention, with Fortis being such a large and well-diversified company, operating in 10 different jurisdictions, it’s certainly one of the best and most reliable utility stocks you can buy for safe dividends.

Plus, in addition to its impressive business and numerous utility operations, Fortis also has an incredible track record of both protecting investors’ capital and providing consistently growing returns.

In fact, it’s much less volatile than the broader market, and for 50 straight years now, Fortis has increased its dividend annually, another reason it’s one of the best utility stocks to buy today.

In just the last five years, its dividend has increased at a compounded annual growth rate of 5.6%. Furthermore, over the next five years, the company expects to increase its dividend between 4% and 6% annually.

Therefore, with Fortis stock trading off its highs and offering a dividend yield that’s now upwards of 4.3%, and with interest rates expected to decline soon, which could send Fortis to new highs, it’s certainly one of the best Canadian stocks to buy today for safe and reliable dividends.

A top energy infrastructure stock for passive income seekers

In addition to Fortis, another high-quality stock that consistently generates billions in cash flow, making it a reliable passive-income generator, is Enbridge (TSX:ENB), the massive energy infrastructure stock.

Enbridge is an ideal stock to buy for safe dividends for several of the same reasons as Fortis. First off, the services it provides are essential to the North American economy. In addition, its operations are well-diversified, helping to mitigate risk for investors.

Plus, the energy infrastructure industry has significant barriers to entry and many of Enbridge’s assets require little maintenance year to year, allowing it to consistently earn tonnes of cash flow that it can both invest in future growth and return to shareholders.

Like Fortis, Enbridge has a lengthy track record of consistent annual dividend increases that has lasted for almost three decades.

So, if you’ve got cash to invest and are looking to earn safe and attractive dividends for years to come, Enbridge and its current yield of roughly 7.3%, is certainly one of the best Canadian stocks to buy now.

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 Daniel Da Costa has positions in Enbridge. The Motley Fool recommends Enbridge and Fortis. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Increasing yield
Dividend Stocks

2 High-Yield Dividend Stocks to Buy as They Bounce

These top dividend stocks still look cheap.

Read more »

ETF chart stocks
Dividend Stocks

The Best Canadian ETFs $100 Can Buy on the TSX Today

These three ETFs are the perfect options for investors looking for growth, income, and a base to hold long term.

Read more »

money cash dividends
Dividend Stocks

TFSA Pension: How to Earn $4,750 Per Year in Tax-Free Income

Here's why the TFSA should be an integral part of your retirement savings strategy.

Read more »

Man considering whether to sell or buy
Dividend Stocks

TELUS Stock: Buy, Sell, or Hold?

TELUS (TSX:T) stock has seen operational improvements but still remains down on a year-over-year basis. So, is it worth it?

Read more »

Senior Couple Walking With Pet Bulldog In Countryside
Dividend Stocks

Retirees: 2 Top TSX Dividend Stocks That Still Look Oversold

These great Canadian dividend stocks now offer high yields.

Read more »

edit Balloon shaped as a heart
Dividend Stocks

2 Dirt-Cheap Retail Stocks Fit for Dividend Lovers

Metro (TSX:MRU) and another great retailer that could be ripe for buying in May 2024 for the next three years.

Read more »

Dividend Stocks

Bull Market Buys: 1 Magnificent Stock to Own for the Long Run

This one cyclical stock could be the best long-term option for investors, especially while shares still offer a steal of…

Read more »

Paper airplanes flying on blue sky with form of growing graph
Dividend Stocks

Outperform the TSX With This Lucrative Dividend Stock

Hydro One is a dividend stock that should beat the TSX index due to a widening earnings base and rising…

Read more »