The dream of every investor is to establish a fast-growing passive income stream. Fortunately, there’s no shortage of great options on the market to help accomplish that goal.
Here’s a look at three long-term options that can provide that fast-growing passive income stream today.
How does a 7% yield sound?
The first option to consider for your fast-growing passive income portfolio is Enbridge (TSX: ENB). The energy infrastructure behemoth boasts a well-diversified, defensive operation.
Enbridge generates the bulk of its revenue from its reliable – and still-growing – pipeline business. The sheer volume of crude and natural gas transported across that pipeline network makes Enbridge one of the most defensive options on the market.
The fact that Enbridge also boasts a growing renewable energy business and the largest natural gas utility in North America is icing on the cake.
Collectively, those segments generate sufficient revenue for Enbridge to invest in further growth and pay one of the best dividends on the market.
As of the time of writing, Enbridge’s quarterly dividend boasts a yield of 7.5%, making it one of the best-paying options on the market. This means that a $40,000 investment will earn just shy of $3,000 in passive income.
Finally, what makes Enbridge one of the fast-growing passive income options? Enbridge continues to provide annual upticks to that dividend. Enbridge has nearly three decades of consecutive annual upticks and plans to continue that tradition.
Big bank, big income
I can’t mention a list of stocks to generate fast-growing passive income without mentioning at least one of the big banks. Bank of Montreal (TSX: BMO) is the oldest of the big banks, and as a result, the bank has paid out dividends for nearly two centuries.
Today that yield works out to a very tasty 5.2%. Using that same $40,000 example from above, investors can expect to earn nearly $2,100 in income. And like Enbridge, BMO has an established precedent of providing investors with annual increases to that dividend.
Prospective investors should also note that Enbridge isn’t just about income. The bank also offers strong potential.
That growth comes thanks to BMO’s acquisition of Bank of the West last year. That deal expanded BMO into 32 U.S. state markets, positioning the bank as one of the largest lenders in that market. It also welcomed billions in deposits across millions of new customers.
One final point to note is timing. BMO currently trades at a near 10% discount year-to-date, making it an ideal time to buy. That dip is largely attributed to the effect of rising interest rates we’ve seen over the past year.
Now that rates are beginning to drop, investors can expect that discount on the stock price to erode, but the opportunity to remain.
fast-growing passive income = rental property?
When thinking about ways to establish a fast-growing passive income stream, rental property often comes to mind. Unfortunately, rates are still in the stratosphere and recommended downpayment values have priced most buyers out of the market.
That’s where another, lower-risk option emerges in the form of RioCan Real Estate (TSX: REI.UN).
RioCan is one of the largest REITs in Canada. The REIT has been adding mixed-use residential properties into its inventory of mostly commercial retail sites over the last few years.
When compared with owning a single-unit rental, RioCan emerges as a lower-cost, lower-risk option for any investor seeking fast-growing passive income.
As a bonus, RioCan even pays out distributions on a monthly cadence, much like a landlord collecting rent. The yield currently works out to a tasty 6.3%, meaning a $40,000 investment (considerably less than a typical downpayment) works out to just shy of $210 per month.
Keep in mind that fast-growing passive income comes without a tenant, mortgage, property taxes, or maintenance.
Final thoughts
No investment is truly without some risk. That’s why the importance of diversifying cannot be understated.
It’s also why the trio of options mentioned above are, in my opinion, great options to establish a fast-growing passive income stream. In addition to the healthy yields they offer, they each boast a unique defensive moat that could prove invaluable over longer periods.
Buy them, hold them, and watch them (and your future passive income) continue to grow.
