Creating decades of passive income through investing might sound like a far-off dream, but with the right approach, it’s entirely achievable. No magic wand is needed. The key is consistency, patience, and a laser focus on quality investments that provide steady dividends and long-term growth. The beauty of this strategy is that it doesn’t require constant tinkering. It’s about setting the wheels in motion, letting time do its work, and enjoying the rewards along the way. So, let’s look at two solid options.
CNR stock
Canadian National Railway (TSX:CNR) might not seem glamorous, but it’s absolutely essential to the North American economy. This is a passive-income stock that literally keeps goods moving, from grain and lumber to oil and consumer products. Without CNR’s sprawling rail network, supply chains across Canada and the United States would grind to a halt. That kind of essential role gives it a unique stability, even in uncertain times.
In its most recent third-quarter (Q3) 2024 earnings, CNR reported revenue of $4.46 billion, up from $4.34 billion the year before. Plus, it reported earnings per share (EPS) of $2.05, beating expectations of $2.01. The numbers might seem small. Yet, for a company of CNR’s size and scale, that steady performance is a testament to its operational efficiency and long-term focus.
The real magic of Canadian National Railway is in its dividend. For 27 consecutive years, the passive-income stock has increased its dividend payouts, a streak that shows no signs of stopping. Its current yield might sit around 2%, but the beauty lies in its growth potential. As CNR’s business expands and it improves efficiencies, those dividends grow right alongside its profits. And while 2% might seem modest now, compounding turns it into something much more significant over time. Combine that with steady capital appreciation, and you’ve got a stock that doesn’t just keep up with inflation but outpaces it.
Fortis stock
On the other side of the coin is Fortis (TSX:FTS), a regulated utility giant that delivers energy to millions of customers across Canada, the United States, and the Caribbean. Utilities might not make headlines, but these are some of the most reliable passive income-generating businesses out there. People need electricity and natural gas no matter what’s happening in the economy. That steady demand allows Fortis to plan for the long term, with reliable cash flow supporting both growth and shareholder returns.
In its Q3 2024 earnings, Fortis reported revenue of $2.61 billion, slightly ahead of estimates, and earnings per share of $0.72, right in line with expectations. It’s not flashy, but it’s dependable. And that’s what makes Fortis such a valuable long-term investment. Fortis’s dividend history is where the company really shines. For 50 consecutive years, Fortis has increased its dividend, putting it in an elite group of companies globally. Its current dividend yield of 4.2% is already attractive for income investors.
Yet what makes it truly special is its predictability. Fortis’s management team has laid out a clear plan for the future, focusing on renewable energy and infrastructure upgrades to meet evolving energy demands. As the world shifts toward cleaner energy, Fortis is positioning itself to be part of that change. And it’s doing so without sacrificing the stability that investors rely on. It’s the rare combination of growth, income, and reliability that makes Fortis a cornerstone stock for anyone looking to build passive income.
Bottom line
Together, Canadian National Railway and Fortis provide a one-two punch of growth and income that can anchor any portfolio. CNR benefits from its critical role in the economy, moving the goods we rely on every day, while Fortis delivers the energy we can’t live without. Both passive-income stocks have long histories of rewarding shareholders, with consistent dividend growth and strong financials that stand the test of time. These aren’t speculative plays or stocks you need to constantly monitor. Once you’ve added them to your portfolio, you can sit back and let time work its magic, knowing that these companies are built to last.
