Invest $7,000 in This Dividend Stock for $414 in Passive Income

Generate a tax-free quarterly income of $103.73, amounting to $414.92 per year with this top Canadian dividend stock.

| More on:
Canadian Dollars bills

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

TSX stocks with a strong history of dividend growth, high yields, and reliable payouts are excellent choices for generating stress-free passive income. The payouts of these dividend stocks are supported by a growing earnings base and solid cash flows. Besides solid fundamentals, these companies have visibility over future income and distributions, thus adding stability to your portfolio and generating dependable income in all market conditions.

Moreover, Canadians can use the TFSA (Tax-Free Savings Account) to generate tax-free dividends and enhance the portfolio’s passive-income potential. The TFSA contribution limit for 2025 is $7,000.

Against this background, here is a top Canadian dividend stock that could generate $414/year in passive income with a $7,000 investment.

The top dividend stock with about 5.9% yield

With a solid dividend growth history, high yield, and reliable payouts, Enbridge (TSX:ENB) is a top option for generating steady passive income in all market conditions.

The integrated energy infrastructure company operates a diversified portfolio, including liquid pipelines transporting and exporting oil and other liquid hydrocarbons. It also has significant investments in natural gas pipelines, gathering and processing facilities, and a Gas Distribution and Storage segment focused on natural gas utility operations.

Additionally, Enbridge is engaged in renewable power generation, positioning it well to benefit from the growing demand for both traditional and green energy sources.  

Enbridge’s assets generate high-quality cash flow and predictable growth, supporting its dividend payments. Thanks to its growing earnings and cash flows, Enbridge increased its dividend for 30 consecutive years, making it a Dividend Aristocrat.

Currently, Enbridge stock offers a quarterly per-share dividend of $0.943. This reflects an attractive annualized yield of about 5.9%. The company’s sustainable earnings, compelling yield, and visibility over future payouts make it a top stock for generating passive income.

Enbridge to grow its dividend

Enbridge’s assets are supported by long-term contracts, regulated cost-of-service tolling frameworks, and power-purchase agreements (PPAs). These low-risk commercial arrangements provide the company with a stable and predictable stream of distributable cash flow (DCF), regardless of market or commodity cycles. This resilience enables Enbridge to enhance its shareholder value through higher dividend payments.

Enbridge’s liquid pipelines business is poised for continued growth. The combination of mainline toll escalators, secured growth projects, and higher system utilization will drive revenue and cash flow growth in this segment. Additionally, the company’s gas transmission and midstream operations benefit from a highly contracted system that serves demand-pull markets, further enhancing cash flow stability.

Enbridge’s diversified utility assets will also contribute to its financials. These assets generate steady and reliable growth, providing a cushion against market volatility. Moreover, the recent acquisition of three U.S. gas utilities is set to expand the company’s low-risk earnings base.

The renewable power segment is another bright spot, with growing demand signalling strong potential for future expansion. This segment complements Enbridge’s traditional energy infrastructure, aligning the company with the global transition to cleaner energy sources.

Earn $414 in passive income

Enbridge’s diversified asset portfolio, highly predictable cash flow, strong balance sheet, and strategic acquisitions position the company for sustainable growth. These strengths will likely increase DCF per share, supporting continued dividend growth.

The table indicates that a $7,000 investment in Enbridge stock within a TFSA will provide a tax-free quarterly income of $103.73, amounting to $414.92 per year.

CompanyRecent PriceNumber of SharesDividendTotal PayoutFrequency
Enbridge$63.50110$0.943$103.73Quarterly
Price as of 01/15/25

Should you invest $1,000 in Baytex Energy right now?

Before you buy stock in Baytex Energy, 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 Baytex Energy 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 Sneha Nahata has no position in any of the stocks mentioned. 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 Dividend Stocks

Canadian dollars are printed
Dividend Stocks

How I’d Use $10,000 to Transform My TFSA Into a Cash-Generating Machine

It may be grim out there, but there are plenty of sky-high dividend yields to choose from on the TSX…

Read more »

Canada day banner background design of flag
Dividend Stocks

Top Canadian Stocks to Buy Right Now With $5,000

Looking for some safe, long-term stocks? These Canadian stocks are where you should look first.

Read more »

Car, EV, electric vehicle
Dividend Stocks

Outlook for Magna Stock in 2025

Magna stock has sunk into the toilet, but it could now be one of the best undervalued stocks out there.

Read more »

alcohol
Dividend Stocks

Why I’d Consider These 3 Blue-Chip Dividend Stocks for a $20,000 Lifelong Investment

In a market correction, it’s essential to focus on blue-chip stocks that offer stability and long-term growth potential.

Read more »

Canadian dollars are printed
Dividend Stocks

Transform Your TFSA Into a Cash-Creating Machine With $14,000

Investing a total of $14,000 across these three stocks could earn you more than $1,039 in tax-free income each year.

Read more »

coins jump into piggy bank
Dividend Stocks

Where I’d Invest $12,000 in Canadian Stocks for Reliable Dividends

Want reliable dividends? Here's a trio of stocks that can provide a juicy income stacked for growth, even with a…

Read more »

Young Boy with Jet Pack Dreams of Flying
Dividend Stocks

Beginner Investors: 4 Top Canadians Stocks to Buy in 2025

If you're new to investing and looking for some Canadian stocks that are worry free, here's where to go.

Read more »

protect, safe, trust
Dividend Stocks

3 Canadian Stocks to Play Defence in a Trade War

Are you wondering what stocks could be safe to buy and hold through the market turmoil? Here are three to…

Read more »