Buy 500 Shares of 2 TSX Stocks for $2,736/Year in Passive Income

These two Canadian stocks with a stellar dividend payment and growth history can help investors start a worry-free passive income stream.

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Investors seeking a steady passive income stream can turn to dividend stocks with a stellar dividend payment and growth history. Fortunately, the TSX has several companies that pay regular dividends, and their payouts are reliable and well-protected by their fundamentally strong businesses.

Against this backdrop, let’s look at two Canadian stocks with relatively resilient business models and a growing earnings base. These TSX stocks have consistently paid and increased their dividends irrespective of market conditions, making them dependable passive income stocks.

Further, investors can earn $2,736/year in passive income if they buy 500 shares of each of these two TSX stocks.

Enbridge

Investors can easily rely on Enbridge (TSX:ENB) stock for passive income. The oil and gas transporter is famous for its durable payouts and a long history of dividend growth. For context, Enbridge has paid dividends for over 69 years. Moreover, it has raised its dividend for 29 years at a compound annualized growth rate (CAGR) of 10%. In addition to its stellar payouts, Enbridge stock offers a high and well-protected yield of about 7.5%.

Enbridge remains committed to rewarding its shareholders with higher dividends in the coming years. The energy company will likely benefit from the higher utilization of its assets, which will support its earnings growth and drive distributable cash flows (DCFs). In addition, the company’s long-term contractual arrangements add a layer of stability to its cash flows. Further, its investments in renewable and conventional energy sources, multi-billion-dollar secured capital projects, and strong balance sheet bode well for future growth.

The energy infrastructure company expects its earnings and DCF to increase at a mid-single-digit rate in the long term, enabling it to grow its annual dividend at a similar pace in future years. Moreover, Enbridge maintains a target payout ratio of 60 to 70% of DCF, which is sustainable in the long term. 

Canadian Utilities

Canadian utility companies are famous for offering dependable dividends owing to their regulated asset base, defensive business model, and ability to generate predictable cash flows. Canadian Utilities (TSX:CU) stands out in the utility sector for the durability of its payments and its ability to grow its dividends. It boasts an impressive dividend growth history of 52 years, the longest by any Canadian company. This shows the resiliency of its payouts and its commitment to enhance shareholder value.

Canadian Utilities has a resilient business model and growing base of regulated utility assets, which helps it to generate predictable cash flows. This enables the company to offer uninterrupted dividend payments. Further, its regulated utility assets ensure that its payouts are well-protected.

The company is expanding its rate base by investing in regulated utility assets. This positions Canadian Utilities well to return higher cash to its shareholders. Moreover, the company’s focus on investing in commercially secured energy infrastructure capital projects augurs well for growth.

Adding to the positives, Canadian Utilities stock provides an attractive yield of about 6% near the current levels.

Bottom line 

Both Enbridge and Canadian Utilities stocks are dependable investments for earning worry-free passive income. The table shows that buying 500 shares of each of these stocks can help you earn over $683 every quarter, or about $2,736/year.

CompanyRecent PriceNumber of SharesDividendTotal PayoutFrequency
Enbridge$48.49500$0.915$457.5Quarterly
Canadian Utilities$29.82500$0.453$226.5Quarterly
Price as of 07/05/2024

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 Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.

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