To earn passive income, you need to make investing a habit. Unless you have hundreds of thousands of dollars to buy dividend stocks, a monthly investment of $1,000 can help you accumulate $181,000 in invested capital in 15 years. If this portfolio gives a 6% yield, it can pay you $10,860 annually. This is a conservative estimate, which excludes the power of compounding and scope for dividend growth. These factors can significantly increase your passive income over 15 years.
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Build a passive income portfolio with these stocks in August
August has brought some good opportunities to invest in income-generating stocks that regularly grow dividends.
Canadian Tire stock
Canadian Tire (TSX:CTC.A) stock fell a sharp 13.7% after the company reported its second-quarter earnings on August 7. Its earnings per share (EPS) fell 4% year-over-year despite a 5.2% surge in revenue. Did the market overreact to the earnings?
The decline in EPS was due to increased operating capital expenditure in its True North growth strategy. It is enhancing its in-store and digital experience by investing in data-driven customer relationships. This calls for investment in store enhancement, technology, and expansion of the Triangle Rewards loyalty program. The strategy will take time to materialize and improve profits.
Now is a good time to invest in Canadian Tire while it trades 12.3% below its 52-week high and lock in a 4.7% yield. The stock has grown its dividend annually at an average annual rate of 15.8% in the last 15 years. Two years of slow dividend growth were followed by high growth as the retailer kept revising its growth strategy to boost sales and optimize costs.
Growing passive income with Canadian National Railway
Canadian National Railway (TSX:CNR) is a good dividend stock with a 20-year history of growing dividends every year at an average annual rate of 14%. The company has a stable source of cash flow from freight charges for transporting goods within and outside Canada. Railways are efficient for transporting heavy goods, such as Petroleum & Chemicals, Metals & Minerals, Forest products, Coal, Grain & Fertilizers, and automotive. Some goods are of high volume, and some are of high margin.
The US tariffs have significantly reduced transborder trading volumes, pulling Canadian National Railway’s share price to its four-year low. However, the company continued to grow its dividend by 5% in 2025, increasing the dividend yield to 2.7%. Although the yield may not look attractive, consider buying this stock for its dividend growth, which will increase the overall investment’s yield in 15 years.
A $5,000 investment in January 2006 would have bought you 213 shares of Canadian National Railway and paid $70.29 in annual dividends. The dividend growth over the next 15 years converted the annual passive income to $756 in 2025, a 15% yield on the $5,000 investment.
Power Corporation of Canada stock
Power Corporation of Canada (TSX:POW) is another good stock as it has grown its dividend at an average annual rate of 7% over the last 11 years. The company stalled its dividend growth for six years between 2009 and 2014 as it was hit by the Global Financial Crisis. POW is a holding company that holds shares of Great West Lifeco and IGM Financial. Having exposure to life insurance and wealth management hit its earnings hard. However, the financial sector has become resilient and more efficient after the crisis.
POW now has diversified exposure in North American and European markets. Even though the stock is trading near its all-time high, it is a good investment for its dividend growth and a 4.2% yield.
