Too often, investors, particularly those who are new to investing, struggle with how to build an income portfolio. This is especially true when considering the initial amounts investors have at their disposal, when the ask is always to drop $30,000 or much more to get a decent income.
Fortunately, it is much easier than you think, and a worry-free income portfolio can be kicked off with just $7,000 (or even less).
Given that $7,000 to build out an income portfolio, here’s where I would invest.
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Start with this telecom stock
Canada’s telecom stocks can be great income producers. They offer a defensive business model that generates a reliable revenue stream which leaves room for growth and a generous dividend.
Telus (TSX:T), in particular, is emerging as a great option for those seeking to establish an income portfolio.
In addition to its core subscription-based offerings, Telus also boasts a growing digital services arm. That segment provides solutions to growing niche segments of the market, including healthcare and agriculture.
Turning to dividends, Telus offers a quarterly dividend with a generous 7.6% yield. Setting aside $2,000 of my initial $7,000 towards Telus will generate an annual income of just over $150.
That’s enough to generate more than a handful of shares each year through reinvestments.
Prospective investors should also note that Telus has provided investors with semi-annual upticks to that dividend going back over two decades without fail. The company also plans to continue that cadence.
Throw in a bank stock with a juicy yield
Another great option to add to any income portfolio is one of Canada’s big bank stocks. Specifically, Bank of Nova Scotia (TSX:BNS) offers investors a unique mix of growth and income-earning potential.
Scotiabank offers investors a stable domestic market at home and a growing presence internationally. In recent years, Scotiabank has refocused its international growth efforts on North American markets over Latin America.
This not only exposes Scotiabank to more mature (and less volatile) markets, but can also fuel long-term growth.
That growth allows Scotiabank to continue investing in additional growth initiatives, as well as paying out a stellar quarterly dividend.
As of the time of writing, the yield on that dividend works out to an impressive 5.9%.
I would allocate $2,500 towards Scotiabank as part of my $7,000 income portfolio. Like Telus, that initial investment would generate enough to purchase several additional shares each year through reinvestments.
Add an energy infrastructure behemoth
The final stock to round out my income portfolio is Enbridge (TSX:ENB). Enbridge is an energy infrastructure stock that offers investors exposure to a lucrative pipeline business, a stable utility, and a reliable renewable energy operation.
All of those segments generate a reliable revenue stream that leaves room for growth and dividend payouts. They also boast significant defensive appeal, making them ideal additions to longer-term portfolios.
As part of an income portfolio, Enbridge really shines. The company offers a 6% yield, meaning that investing my final $2,500 will still generate a few shares each year through reinvestments.
Prospective investors should also note that Enbridge has an established cadence of providing generous annual upticks to that dividend going back three decades without fail.
Build your $7,000 income portfolio today
No stock, even the most defensive, is truly risk-free. Fortunately, the trio of stocks mentioned above can offer investors tasty dividends and growth with some defensive appeal.
Here’s how that initial $7,000 income portfolio investment breaks down.
| Company | Recent Price | No. of Shares | Dividend | Total Payout | Frequency |
| Telus | $21.90 | 91 | $1.67 | $151.97 | Quarterly |
| Bank of Nova Scotia | $71.78 | 34 | $4.24 | $144.16 | Quarterly |
| Enbridge | $62.71 | 39 | $3.77 | $147.03 | Quarterly |
While investors won’t be able to retire on that $440 annual income, it is more than enough to generate more than several new shares of each stock each year.
That fact alone makes these stocks great options for any well-diversified income portfolio.
Buy them, hold them, and watch your future income grow.
