Most investors long for the day when an annual dividend income of $2,000 or even more powers their portfolio. Fortunately, it’s not as hard to accomplish as some would think.
In fact, investors looking to establish an annual dividend income can start with these three stocks and $5,000.
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Start with something big
One of the great stocks to buy to establish an annual dividend income is Enbridge (TSX: ENB). Enbridge is best known for its utility and pipeline business, but it has also invested heavily in renewables over the past two decades.
Across those segments, Enbridge boasts a reliable and increasingly necessary service. The pipeline network, in particular, has massive defensive appeal. The segment hauls a whopping one-third of all North American-produced crude.
Enbridge also boasts significant defensive appeal across all its segments and is a superb source of dividends. And that reliable and recurring stream allows Enbridge to invest in growth and pay out a very tasty dividend.
As of the time of writing, Enbridge pays out a yield of 6.91%. This means that investors who drop $12,000 into the stock will generate an annual dividend income of just over $800.
And perhaps best of all, Enbridge continues to provide upticks to that dividend. The company has an established practice of annual bumps that go back three decades without fail.
How about a monthly income like a landlord?
Owning and renting a property is one of the tried and tested ways to build out a passive income. Unfortunately, the rising costs of owning a property have put that dream out of reach for many would-be landlords.
Fortunately, RioCan Real Estate (TSX: REI.UN) offers an alternative. RioCan is one of the largest real estate investment trusts (REITs) in Canada, with a massive portfolio of properties that blankets the country.
In recent years, RioCan has moved to include mixed-use residential properties into that mix, and that is where an opportunity lies.
The properties are located in high-demand routes along traffic lines. And unlike owning a single property, there are no maintenance, mortgage, or tenant worries to consider. Instead, investors can spread that risk out to hundreds of units and still earn a juicy annual dividend income.
Turning to income, RioCan offers a juicy 6.28% yield. Like a landlord, RioCan provides that distribution to investors on a monthly cadence.
Finish with a real King
Utility stocks are some of the best, most defensive options on the market. Part of the reason for that is thanks to the lucrative business model that they follow.
In short, utilities provide a service which is bound by long-term, regulated contracts that span decades. As long as the utility continues to provide that service, it earns a stable and recurring revenue stream.
That revenue stream allows the utility to invest in growth and pay out a dividend. And it’s that dividend that can help investors realize a juicy annual dividend income.
That utility stock to note is Canadian Utilities (TSX: CU). Not only does the company pay out a juicy 5.49% yield, but it also boasts an incredible 52 consecutive years of increases, making it a Dividend King.
Not only does this make it a must-have stock to earn an annual dividend income, but it also makes it a must-have defensive holding for any portfolio.
Establish your annual dividend income
No stock, even the most defensive, is not without some risk. Fortunately, there are investments that offer a defensive moat that can minimize some of that risk.
That includes the trio of stocks mentioned above, which can also provide a source of income that can last for decades. Here’s a look at the annual dividend income for those stocks.
| Company | Recent Price | No. of Shares | Dividend | Total Payout | Frequency |
| Enbridge | $52.98 | 226 | $3.66 | $827.16 | Quarterly |
| Canadian Utilities | $33.04 | 363 | $1.81 | $657.03 | Quarterly |
| RioCan Real Estate | $17.67 | 679 | $1.11 | $753.69 | Monthly |
In total, that’s an annual dividend income of $2,237.88 with an initial investment of just $36,000. And keep in mind that reinvesting those dividends until needed will allow that number to grow further.
In my opinion, one or all of the above stocks would do well as part of a larger, well-diversified portfolio.
Buy them, hold them, and watch your investment (and income) grow.
