Invest $16,650 in this TSX Stocks for $1,000 in Passive Income

Top Canadian stocks with solid dividend payment and growth histories, high yields, and sustainable payouts are reliable bets to generate worry-free passive income. Notably, the payouts of these dividend stocks are supported by their growing earnings base and resilient cash flows. Besides their solid fundamentals, these companies have visibility over future earnings growth, supporting higher distributions.

Against this background, let’s look at a top Canadian dividend stock that, with a $16,650 investment, could generate $1,000/year in passive income.

The top dividend stock with an about 6% yield

Investors seeking a reliable passive income stream could consider adding Enbridge (TSX: ENB) to their portfolios. Its solid history of dividend payments and growth, sustainable payouts, high yield, and visibility over future dividend growth make it a top option for generating steady passive income regardless of market conditions.

Enbridge is an integrated energy infrastructure company with a highly diversified portfolio that spans liquid pipelines, natural gas pipelines, and gas distribution and storage. The company also has investments in renewable power generation, positioning itself to benefit from the rising demand for both traditional and green energy solutions.

The energy infrastructure company’s highly contracted cash flows experience minimal volatility, allowing it to predictably pay and increase the dividend. Furthermore, with negligible exposure to commodity price fluctuations, Enbridge stands out from many of its midstream peers. Its ability to generate resilient and growing earnings and cash flows has fueled 30 consecutive years of dividend hikes, earning it the status of a Dividend Aristocrat.

Enbridge stock currently pays a quarterly cash dividend of $0.943 per share. This translates into an attractive annualized yield of approximately 6%.

Enbridge’s dividend to keep rising

With its diversified portfolio across conventional and lower-carbon energies, Enbridge is well-positioned to consistently pay and increase its dividend in the coming years. The company’s energy infrastructure assets connect key supply basins with demand-driven markets, including regions with increasing renewable and new energy needs. This strategic positioning ensures high system utilization and leads to robust distributable cash flows (DCF).

Enbridge’s payouts are supported by long-term contracts, regulated cost-of-service tolling frameworks, power purchase agreements (PPAs), and other low-risk commercial arrangements. These factors provide predictable cash flows, shielding the company from market and commodity price fluctuations and enabling it to pay and increase its dividend.

The energy giant’s liquid pipelines business remains a growth engine, supported by toll escalators, secured expansion projects, and rising system utilization. Further, the gas transmission and midstream operations will likely gain from a highly contracted structure that serves demand-driven markets, reinforcing cash flow stability.

Enbridge’s utility operations further enhance its financial stability, generating steady and reliable earnings. The recent acquisition of three U.S. gas utilities is expected to significantly expand its low-risk earnings base, providing additional growth potential.

In the renewable power segment, Enbridge is poised to capitalize on the shift toward cleaner energy sources. With demand for renewables on the rise, Enbridge’s investments in this space present a promising avenue for future expansion.

Thanks to its solid business model, Enbridge’s management projects a mid-single-digit growth in its earnings and DCF per share in the long run. Further, its dividend will likely grow in line with its DCF per share.

Earn over $1,000 in passive income

Enbridge’s assets generate high-quality cash flow and predictable growth, supporting its dividend payments. Further, the ongoing strength in its business, new assets entering service, tuck-in acquisitions, and contributions from the acquired utilities augur well for future payouts.

The table indicates that a $16,650 investment in Enbridge stock will provide a stress-free quarterly income of $250.84, amounting to $1,003.35 per year.