Build a Cash-Gushing Passive-Income Portfolio With Just $25,000

Investors seeking to build a cash-gushing, passive-income portfolio with just $25,000 could consider adding top dividend stocks with high yields and reliable payouts. Further, Canadian investors can leverage the Tax-Free Savings Account (TFSA) to earn a tax-free passive income for decades. Since dividends are not taxed in a TFSA, it enhances your portfolio’s cash-generating potential over time.

With this background, let’s explore two reliable TSX stocks with sound fundamentals, a strong track record of consistent dividend payments, high yields, and visibility on future payouts to generate dependable income in all market conditions.

Enbridge

Enbridge (TSX:ENB) is one of the most reliable TSX stocks that can help you build a cash-gushing passive-income portfolio. With a history of stellar dividend payments spanning seven decades, including 30 years of consistent increases, Enbridge offers resilient dividends in all market conditions.

Enbridge’s diversified portfolio and contracted assets enable it to generate significant distributable cash flows (DCF), which support its payouts. Further, the company’s payouts are backed by low-risk commercial arrangements, including long-term contracts, power-purchase agreements, and regulated cost-of-service tolling frameworks, which drive predictable cash flows. Furthermore, Enbridge has minimal exposure to commodity price fluctuations, which adds stability to its operations and distributions.

In addition, Enbridge’s strategic investments in conventional and green energy assets position it favourably to capitalize on evolving energy demand. Further, its liquid pipelines connect major supply basins with demand markets, ensuring high system utilization and enabling it to generate solid DCF.

The company’s management forecasts earnings and DCF per share to grow in the mid-single digits range in the long term. Further, Enbridge expects its dividends to grow in line with its DCF per share. Besides growing dividends, Enbridge stock offers a high yield of about 5.9%.

SmartCentres REIT 

Investors could add SmartCentres REIT (TSX:SRU.UN) stock to enhance their income portfolio. This real estate investment trust (REIT) pays a monthly dividend of $0.154 per share. Based on its current payouts and closing price of $24.92 on February 10, it offers a high yield of 7.4%. The company’s payouts are supported by its resilient and diversified real estate portfolio. Its core retail properties generate solid same-property net operating income (NOI) in all market conditions.

Further, SmartCentres’s grocery-based retail centres witness high demand and retention rates and are relatively insulated from economic downturns. These properties, therefore, generate stable income and have high cash collection and occupancy rates.

The ongoing strength in its retail properties, increase in lease activity with higher rents, strategic development initiatives, focus on mixed-use development projects, and long-term contracts position it well to deliver higher NOI and generate significant returns for its shareholders. Moreover, its substantial land bank will strengthen its growth potential.

Earn $1,657 in tax-free passive income

Enbridge and SmartCentres REIT are dependable stocks that generate solid cash in all economic conditions. Their solid payout history, focus on enhancing shareholder value, and high yields make them reliable investments for generating tax-free passive income.

The table shows that an investment of $25,000 ($12,500 in each stock) can help you earn over $1,657.56 in tax-free income per year.