Buy 8,850 Shares of This Top Dividend Stock for $2,000/Month in Passive Income

Let’s do the math on what it would take to generate $2,000 a month in passive income from Enbridge (TSX:ENB) right now.

| More on:
analyze data

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Just like good wines get better over time, finding top-tier dividend stocks with the potential to continue to provide growing dividend income (and stability) over time is difficult. Some may say impossible. And generating $2,000 per month in passive income is something that may seem to be an unattainable goal, at least over any reasonable timeframe.

However, blue chip energy infrastructure company Enbridge (TSX:ENB) is one of the best dividend stocks investors can buy for long-term passive income. At its current price of $41.13 at the time of writing, buying 8,850 shares will get investors right to that $2,000 per month income. Such an investment would cost around $364,000, so creating this sort of passive income won’t be cheap (and certainly comes with some capital risk).

Created with Highcharts 11.4.3Enbridge PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

That said, here’s why I think making such a large bet on Enbridge makes sense, particularly for those investors looking to diversify their RRSP or other accounts and take a large position in one higher-yielding stock.

A dividend yield driven by stability

One of the reasons investors can generate $24,000 per year on a $364,000 investment is Enbridge’s current yield of around 6.6%. That’s a yield I would put at the upper range of being comfortable, considering once yields get toward the 10% level that’s a pretty good indication the market is likely pricing in some dividend cuts moving forward.

I don’t think that’s the case for Enbridge for a few reasons. Most importantly, the company’s entire business model, which involves transporting and delivering oil and natural gas from the source to its midstream clients, is extremely stable. So long as the taps stay on (and they will need to, for at least a few more decades), investors can bet that Enbridge will keep the profit taps on. And with the company delivering roughly 20% of all natural gas consumed in the U.S. and 30% of all crude oil produced in North America, this is perhaps the best way to play this trade in my books.

Why Enbridge looks like a long-term buy

Enbridge is a stock I think is worth holding for the long term in a retirement account, due in part to this stock’s disproportionately high yield. And while I think this yield is sustainable, I do think some significant capital appreciation is likely over time, given that the company’s valuation multiple is more attractive than it’s been in the past.

I keep going back to stability and Enbridge’s low-risk nature as the key rationale I’d put forward for owning this name. With the energy independence discussion only heating up (given rising geopolitical conflicts), Enbridge provides a nice patriotic option for Canadian investors to consider with big upside potential over the next decade or two (at a relatively low beta). That’s hard to find in this market.

Additionally, I think Enbridge should have more room to raise its distributions over time, as the company pays down debt and improves its balance sheet. I would say this company’s management team is among the best in the business. Thus, there’s a lot to like about the trajectory this company is on relative to its stable operating business.

Simply put, this is a great option for investors looking to create meaningful passive income in retirement. For those with the funds available to create a $2,000 monthly income stream, this would be a top option of mine to consider right now.

Should you invest $1,000 in Computer Modelling Group Ltd. right now?

Before you buy stock in Computer Modelling Group Ltd., consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Computer Modelling Group Ltd. wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Chris MacDonald has positions in Enbridge. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Energy Stocks

Investor wonders if it's safe to buy stocks now
Energy Stocks

Billionaires Might Sell U.S. Stocks and Buy This Canadian Stock to Avoid Tariff Risks

Billionaires might be worried about the future of U.S. stocks with the markets the way they are, and looking for…

Read more »

Offshore wind turbine farm at sunset
Energy Stocks

Got $500? Where I’d Invest it in This Green Energy Stock for Long-Term Sustainable Returns

This green energy company’s growing scale and focus on rewarding investors make it a top bet for investors looking for…

Read more »

golden sunset in crude oil refinery with pipeline system
Energy Stocks

TC Energy: Buy, Sell, or Hold in 2025?

TC Energy is up 30% in the past year. Are more gains on the way?

Read more »

golden sunset in crude oil refinery with pipeline system
Energy Stocks

Is Enbridge Stock (TSX:ENB) a Buy for its 5.9% Dividend Yield?

This solid dividend payer has the potential to help investors generate reliable passive income for decades.

Read more »

nugget gold
Dividend Stocks

Recession Stocks Are Back: Consider Buying the Dip This April

Recession stocks are back, and this one could be a solid winner.

Read more »

Person holds banknotes of Canadian dollars
Energy Stocks

Best Stock to Buy Right Now: Suncor vs Cenovus?

Suncor stock's 4.2% dividend yield vs Cenovus Energy's growth potential: Tariff-proof safety or growth gamble?

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

How to Earn $500/Month in Tax-Free Income With Your TFSA

Canadians can earn $500 or a desired tax-free income every month by saving and investing through the TFSA.

Read more »

how to save money
Energy Stocks

1 Canadian Stock Ready to Surge in 2025 and Beyond

This Canadian stock has seen significant growth, but more could come for 2025 and beyond.

Read more »