Stocks are a great asset to earn passive income. Firstly, they are incredibly flexible. You can buy and sell stocks quickly, and transaction fees are very affordable (usually between $5-10 per trade).
Lower risk and grow your passive income with stocks
Secondly, you can diversify your holdings with stocks. You can hold a mix of sectors, industries, and segments. Likewise, you can weight stocks in any way you see fit.
Lastly, you can earn substantial income at relatively low risk. High-quality companies generate stable dividend income.
It is not guaranteed, but the best companies are very reluctant to ever reduce or drop their dividends. The best dividend stocks can help you earn capital upside as well. As businesses grow, their stocks (and hopefully dividends) grow as well.
If you have $10,000 to invest, here’s a mini three-stock portfolio that would earn $482.51 per year if equally weighted.
An infrastructure stock for passive income
Pembina Pipeline (TSX:PPL) is a great stock if you want exposure to energy, but with less commodity pricing risk. It operates a large portfolio of energy infrastructure assets in Western Canada (pipelines, storage, gas processing, export).
Over 80% of its income is from long-term contracted assets. This has supported its dividend when energy prices went negative and when oil charged over US$100 per barrel.
Pembina is extremely well-run, and it tends to execute very well on growth projects. It has a strong balance sheet that will support major projects like the Cedar LNG facility.
Pembina stock yields 5.2% today. A $3,333 investment would earn $43.47 a quarter or $173.88 a year.
A safe utility stock for growing dividends
Another stock for passive income is Fortis (TSX:FTS). Rising power demand around the world continues to be a major driver that should support Fortis’ growth. It is one of the largest utility businesses in Canada and has operations across North America.
Fortis may not be the fastest growing business. However, if it can execute, it can achieve around 5% annual earnings per share growth over the long run. FTS stock has a 50-year track record of consecutively increasing its dividend. That is likely to grow with earnings long term.
This passive income stock yields 4.2%. A $3,333 investment would create $34.81 quarterly or $139.24 annualized.
A real estate stock for monthly income
Dream Industrial REIT (TSX:DIR.UN) is a good place to earn steady, elevated passive income. Dream is one of the largest industrial property landlords in Canada. It also has a large portfolio in Europe.
Industrial real estate has been one of the most resilient real estate assets in the past few years. Strong demand has maintained strong rental rate growth.
Dream’s current portfolio average rental rate is 30% below market. That should support years of strong organic growth.
This passive income stock has a yield of 5%. A $3,333 investment would earn $14.12 monthly or $169.39 annually.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Pembina Pipeline | $52.68 | 63 | $0.69 | $43.47 | Quarterly |
| Fortis | $56.30 | 59 | $0.59 | $34.81 | Quarterly |
| Dream Industrial REIT | $13.76 | 242 | $0.05833 | $14.12 | Monthly |
