Establishing a portfolio that can provide decades of passive income is the dream of every investor. Surprisingly, realizing that dream isn’t as hard as one would expect it to be, especially if you buy the right stocks now that you can hold forever.
To help accomplish that goal, here are several must-buy stocks for decades of passive income potential.
Start with something you can put on autopilot
Investors new to investing should consider starting with a stock that can provide defensive appeal and decades of passive income. And that stock to consider buying now is Fortis (TSX:FTS).
For those unfamiliar with the stock, Fortis is one of the largest utility stocks in North America. Utilities provide a necessary service, that is compensated with a stable and recurring revenue stream.
That recurring revenue stream is backed by long-term regulated contracts that span decades. This allows Fortis to invest in growth and pay out a handsome dividend.
Today that quarterly dividend boasts a yield of 4.31%. This means that investors with a $40,000 position in Fortis, will earn an income of just over $1,720.
More importantly, prospective investors should note that Fortis has provided annual upticks to that dividend for 50 consecutive years without fail. Not only that, but Fortis has committed to keep those increases coming over the next several years.
That fact alone makes Fortis a prime candidate for any investor seeking decades of passive income.
Invest in a bank stock to supercharge your portfolio
Canada’s big banks are among the best long-term investment options on the market. Specifically, the banks generate a reliable revenue stream that is backed by a strong domestic segment. They also boast strong long-term growth from international markets.
Both collectively provide investors with the potential for decades of passive income.
The one big bank to consider to meet that objective is Bank of Montreal (TSX:BMO). BMO is the oldest of the big banks and has paid out dividends for nearly two centuries without fail. This fact alone makes BMO a solid option for any portfolio.
As of the time of writing, BMO offers a quarterly yield of 4.90%. Using the same example from above, that translates into a juicy income of $1,900. And like Fortis, BMO has an established cadence of providing investors with solid annual bumps to that dividend.
Apart from its income-generating capabilities, BMO also shines as a solid growth driver. In recent years, the bank has focused its expansion on the U.S. market. That investment has helped BMO to become one of the largest banks in the U.S. market with a presence in 32 state markets.
Here’s another solid income producer
Another great option for investors who are looking for decades of passive income is Canada’s telecoms. One such example is Telus (TSX:T)
Telus offers core subscription services that generate an increasingly defensive revenue stream. Those services include subscription-based offerings for wireline, wireless, TV and internet services. More importantly, that revenue stream translates into a handsome dividend to investors. Today that quarterly dividend works out to an impressive 6.69% yield.
This means a $40,000 investment will provide a juicy income of just over $2,650. Telus has also provided investors with 25 consecutive years of increases, making it a solid option for investors looking to generate decades of passive income.
Another key reason to consider adding Telus to any portfolio right now is the market itself. Rising interest rates have driven down capital-intensive businesses like telecoms in recent years.
As a result, Telus now trades down a whopping 30% over the trailing two-year period. That drop comes despite the solid revenue and the long-term potential of its core subscription services.
What prospective investors need to take into consideration is that Telus is a long-term investment. The market, and by extension, Telus’ stock price will recover over that longer period. If anything, investors should view the current stock price as a significant discount.
How to generate decades of passive income
No investment, even the most defensive is without some risk. While that applies to the trio of investments listed above, each of those stocks provides some defensive appeal to investors.
In my opinion, one or more of these stocks should be core holdings in any well-diversified portfolio.
