Are you interested in making passive income by investing in stocks?
If so, it’s time to step back and get some perspective. While it is definitely true that you can earn passive income in stocks, some common passive income goals (i.e., living off dividends) are not easily attained. It takes time, dedication and discipline to get enough income to actually live off of. However, it is possible to get some passive income coming in no matter how little money you have.
In this article, I will explore the question of whether or not passive income is legit, ultimately concluding that it is if you keep your goals within reason. I will start by looking at how much passive income a person can realistically earn with little risk, then move on to other topics.
About 5% per year with an acceptable level of risk
While I can’t tell you exactly what dollar amount of passive income you as an individual can make, it is possible to say how much passive income can be earned at low risk in Canada in 2025. The amount is somewhere around 5%. A Canadian broad market index fund yields about 2.5% right now, so you cannot get 5% with the lowest-risk Canadian equity investment. However, the U.S. 30-year yields 4.51% and Canadian dividend funds yield close to 5%. So, just slightly under 5% can be obtained while following prudent risk management strategies.
What does 5% actually look like in dollars? It all depends on how much money you have to invest. With $10,000 invested, 5% is $500 per year. With $100,000 invested, it is $5,000 per year. And so on and so forth. To find out how much you can get investing your personal savings at 5% interest, multiply 0.05 by the amount you have saved.
What about if you take on more risk?
If 5% per year in passive income doesn’t seem like enough to you, you’ll need to look into riskier investments. One such strategy is investing in high-yield stocks. Such stocks pay you more dividend income per dollar invested than other stocks do, but they are riskier than the broad market indexes on average.
Consider Enbridge (TSX:ENB), for example. It’s a Canadian pipeline company with a 6.1% dividend yield. The stock got its high yield through a combination of dividend increases and somewhat tepid stock price appreciation. The stock has been rallying lately, but it delivered a somewhat lacklustre performance for most of the last five years. As you can see in the chart below, it flatlined for several years before finally staging a rally last year.
How much passive income could you get with ENB stock? Potentially, quite a bit! As the chart below shows, you’d get $6,100 with $100,000 invested in it, assuming the dividend doesn’t change.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Enbridge | $61.81 | 1,618 | $0.9425 per quarter ($3.77 per year) | $1,525 per quarter ($6,100 per year) | Quarterly |
As for whether the dividend actually will change, Enbridge’s payout ratio (90%) is quite high. That indicates a cut could happen. On the other hand, the company operates almost like a toll booth and has a great history of dividend increases. I’d say the dividend will either stay the same or increase going forward.
