Building a portfolio that could generate income forever sounds like a hard task for those new to investing, but it’s easier than most would believe.
Let’s get started on building that portfolio to generate income forever, and let’s also do it with just $42,000.
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Building that juicy income-generating portfolio
To kick off this task, let’s start with a handful of great dividend stocks. Specifically, these are stocks that continue to provide annual upticks, generate a reliable and recurring revenue stream, and also boast some growth.
Specifically, to start, I would target both Telus (TSX: T) and Enbridge (TSX: ENB).
Telus is one of Canada’s big telecom stocks, and pays out a generous 7.49% yield. The telecom’s business is also highly defensive, thanks to its subscriber-based business model and low churn.
Turning to Enbridge, the company is an energy infrastructure behemoth. Apart from its lucrative pipeline business, Enbridge also generates a growing, reliable revenue stream from its renewable energy business and its natural gas utility.
Collectively, those segments provide a recurring revenue stream that leaves room for growth while also paying out a very generous 6.11% yield.
Both Telus and Enbridge have an established history of providing annual or better upticks to those dividends. In the case of Enbridge, that history spans over three decades without fail.
As an initial investment, I would allocate a cool $12,000 into each stock, and let the magic of reinvested dividends do the heavy long-term lifting. That initial investment will provide an income of just over $1,630 after investing just $24,000.
Put that portfolio into high gear
With both Telus and Enbridge providing a juicy income, the next stocks I would add to that portfolio to generate income forever are Bank of Nova Scotia (TSX: BNS) and Canadian Utilities (TSX: CU).
As one of Canada’s big bank stocks, Scotiabank generates a stable and recurring revenue stream from its operations in Canada. The bank is also known as Canada’s most international bank, with a slew of growth opportunities in foreign markets, such as the U.S.
That mix of stability and growth allows Scotiabank to offer a juicy 5.92% yield, which makes this a must-have stock for any portfolio to generate income forever.
Canadian Utilities boasts an equally attractive yield of 4.84% and has the benefit of being one of just two Dividend Kings in Canada. This means that the company has provided 50 consecutive years of annual dividend increases.
That’s an incredible amount of stability that can be traced back to the reliable business model that utilities adhere to.
Collectively, both stocks do well to balance income generation and growth, while also throwing in some defensive appeal.
Finally, let’s supercharge your portfolio
One final option to consider adding to this portfolio to generate income forever is RioCan Real Estate (TSX: REI.UN). RioCan is one of the largest real estate investment trusts (REITs) in Canada, with a growing portfolio of mixed-use residential properties.
Those properties should be viewed as an alternative to owning a rental property, which has become prohibitively expensive.
Investing the last $5,000 of our initial $42,000 into RioCan will provide an additional income of just over $330.
Generate income forever
The combined income-earning potential for those five stocks and $42,000 initial investment is a juicy $2,600. Additionally, that portfolio offers defensive appeal in addition to growth and income-earning potential.
Here’s how that stacks up for all five investments.
| Company | Recent Price | Total Invested | No. of Shares | Dividend | Total Payout | Frequency |
| Telus | $22.24 | $12,000 | 539 | $1.67 | $900.13 | Quarterly |
| Enbridge | $61.68 | $12,000 | 194 | $3.77 | $731.38 | Quarterly |
| Bank of Nova Scotia | $74.37 | $7,000 | 94 | $4.40 | $413.60 | Quarterly |
| Canadian Utilities | $37.83 | $5,000 | 132 | $1.83 | $241.56 | Quarterly |
| RioCan Real Estate | $17.54 | $5,000 | 285 | $1.16 | $330.60 | Monthly |
Perhaps best of all, investors looking to generate income forever but who are not ready to draw on that income can reinvest that income until needed. Each of the payouts above is sufficient to generate more than a few shares each year through reinvestments alone.
This lets any eventual income continue to grow until needed.
In summary, buy them, hold them, and watch them (and your future income) grow.
