In investing, it helps to have goals. Whether that’s minimizing risk, maximizing returns or something in between, you should know what you’re after: what you measure gets better.
A common investment goal is maximizing dividend income. Some investors perceive that dividends are a surer thing than capital gains and want as much yield in their portfolios for this reason. The academic jury is still out on this — there’s evidence that dividend investing works in tax-sheltered retirement accounts, but underperforms in taxable accounts (dividends are taxed more frequently than long-term capital gains).
Personally, I do set annual dividend and interest income goals, mainly because such income sources tend to be more stable than returns from capital gains. This year, I hit (actually exceeded) my $5,000 projected income goal. For next year, I’m setting my goal at +$6,000. In this article, I will explore how I plan to get there.
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Guaranteed investment certificates
Guaranteed investment certificates (GICs) are fixed-income securities offered by Canadian banks. They function like bonds; you agree to have your money lent out for a while, and in return, you get some interest income. I put quite a bit of my money into GICs back in 2022 and 2023, when interest rates were high. In 2024, rates started to come down as the Bank of Canada began cutting that year. Today, you can only get about 2.5% on GICs (unless you buy index-linked GICs, which are riskier).
Because GICs have less yield now than they had in past years, I will probably buy fewer of them than I bought previously. I may invest some of the money I get from GICs that mature this year into stocks. Nevertheless, GICs will be a part of my passive-income portfolio for the foreseeable future.
Stocks
Next up, we have stocks. Stocks contributed significantly to my passive income in 2025 and will continue to do so in 2026. In fact, they will probably make up a higher percentage of my passive income next year, as I plan to invest less money in GICs next year than this year.
Consider Toronto-Dominion Bank (TSX:TD), for example. As Canada’s second-largest bank, its shares sport a 4.145% dividend yield. The yield has been getting smaller this year due to the market-beating gains the stock has been making. Nevertheless, TD stock has more dividend potential than an average GIC has interest income, and isn’t all that much riskier.
With TD’s 4.145% yield, you’d get $4,145 per year back on a $100,000 investment in it, if dividends don’t change. Historically, TD’s dividends have changed: they’ve risen 90% of the time, while declining in rare situations like severe recessions. So, the $4,150 an investor could get by holding $100,000 worth of TD is probably pretty reliable.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| TD Bank | $101.35 | 987 | $1.05 per quarter ($4.20 per year) | $1,036 per quarter ($4,145.40 per year) | Quarterly |
Foolish takeaway
Taking everything into account everything I’ve written in this article, I’m pretty confident that I will hit my $6,000 passive-income goal for 2025. My investments are doing well this year, which provides the opportunity to reinvest gains at high yields. If you’re looking to boost your passive income in 2026, feel free to try out the ideas mentioned above. They should work out pretty well long term.
