Can a $25,00 investment earn you $3,800 in annual passive income? Yes, provided you invest in a stock that grows its dividends or offers a dividend-reinvestment option (DRIP). A $3,800 annual dividend on $25,000 investment means a 15.2% yield. Stocks that give such high yields are risky, with a high probability of a dividend cut. However, if you stay invested in a dividend-growth stock, you can achieve a 15.2% yield that is sustainable. Canadian Natural Resources (TSX: CNQ) has done it before and is doing it now.
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Canadian Natural Resources can help you grow annual passive income
Those who invested $25,000 in Canadian Natural Resources in July 2015 bought 1,543 shares at around $16.2 a share. At that time, the oil and gas company paid $0.46 annual dividend per share. Over the years, the company increased its production capacity by adding new oil sands reserves, thereby increasing its cash flow. The company increased its dividend to $2.5 in 2025, and those 1,543 shares are now paying $3,626 in annual dividends.
Can the oil and gas company replicate its past growth in the next 10 years?
In 2015, the U.S. shale gas exploration disrupted the industry and reduced oil prices from US$100/barrel to US$65/barrel. Even in such a situation, Canadian Natural Resources managed to grow its dividend by 2%. The company has oil sands reserves, which are cost-effective and require low maintenance compared to shale gas. Its cost advantage, low-maintenance reserves, strong balance sheet, and rich product mix helped the company grow its dividend at an average annual rate of 24% between 2017 and 2025.
It can continue to grow its dividend at a strong double-digit rate in the coming 10 years as it monetizes the $8 billion worth of reserves it acquired in 2024. The company slowed its dividend growth rate to 9.9% in 2025 as its net debt grew to $18.7 billion. It is channelling more free cash flow (FCF) to reduce net debt to $12 billion. Once it reaches the target, it could divert 100% FCF to give returns to shareholders.
However, it is better to take a conservative dividend-growth rate estimate of 12%.
How can $25,000 in Canadian Natural Resources create $3,800 annual passive income?
The high dividend growth of Canadian Natural Resources makes it an ideal investment for a Tax-Free Savings Account (TFSA). The account’s tax-free withdrawals ensure you get the complete dividend without paying dividend tax.
Canadians in the 30-34 age group have $59,110 of unused TFSA contribution room, as per data from Statistics Canada. You can allocate $25,000 of this contribution room and buy 582 CNQ shares. Your dividend could grow at a 12% compounded annual growth rate.
| Year | CNQ Dividend at 12% CAGR | Annual Dividend Income on 582 CNQ shares |
| 2025 | $2.350 | $1,367.70 |
| 2026 | $2.632 | $1,531.82 |
| 2027 | $2.948 | $1,715.64 |
| 2028 | $3.302 | $1,921.52 |
| 2029 | $3.698 | $2,152.10 |
| 2030 | $4.142 | $2,410.35 |
| 2031 | $4.638 | $2,699.60 |
| 2032 | $5.195 | $3,023.55 |
| 2033 | $5.819 | $3,386.37 |
| 2034 | $6.517 | $3,792.74 |
Canadian Natural Resources does not offer DRIP and buys back shares annually, which helps it grow dividends at a higher rate. If you don’t want to wait for 10 years, you can accelerate your passive-income portfolio by reinvesting your CNQ dividends in DRIP stocks like Telus and Manulife Financial.
These two stocks will diversify your portfolio across sectors and help you compound returns. Suppose you invest $1,367 in dividend income in Telus DRIP, you can buy 59 shares for $23 per share. Telus will use the $96.5 annual dividend and credit four DRIP shares if the stock price hovers around $23. You can keep accumulating more income-generating shares from the passive income of CNQ dividends tax-free in a TFSA.
