Generating recurring, stable passive income is an excellent benefit of stock market investing that not many new investors realize. By building a diversified self-directed investment portfolio of dividend stocks with high yields and long-term growth, you can make a passive-income machine that can help you achieve financial freedom.
Today, we will take a quick look at some of my top picks among high-quality dividend stocks that you can buy and hold in your portfolio to generate passive income.
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Fortis
Fortis (TSX:FTS) is a $39.88 billion market-cap leader in the North American regulated electric and gas utility sector, boasting several utility businesses under its belt. Due to the essential nature of its services, Fortis is the kind of business that can earn money through all market cycles. To add to its defensive appeal, Fortis generates almost its entire revenue through long-term contracted assets in regulated markets, meaning stable, reliable, and virtually predictable cash flows.
Fortis has increased payouts for over 50 years, making it a top pick for income-focused investors. As of this writing, it trades for $78.59 per share and pays investors their dividends at a 3.26% dividend yield.
Canadian Utilities
Canadian Utilities (TSX:CU) is another TSX dividend stock that you can invest in for the predictability it offers. CU is a $13.14 billion market-cap regulated utility stock that primarily provides gas and electricity utility services across Canada and Australia. It also has a presence in the U.S. and Mexico.
CU stock is the only other TSX stock with a longer dividend-growth streak than Fortis. Its stable and recurring revenue supports the longest dividend-growth streak in the Canadian stock market. As of this writing, CU stock trades for $48.29 per share and pays investors their quarterly distributions at a 3.83% dividend yield.
Telus
Telus (TSX:T) is another business that provides essential services, but it doesn’t operate in the energy industry. Telus is a $29.10 billion market-cap leader in the Canadian telecom space. The world-leading communications technology company has operations in over 45 countries, generating over $20 billion in annual revenue through over 20 million customers worldwide.
The company’s investments across different sectors have diversified its income streams and provide a more reliable support to its high-yielding dividends. As of this writing, Telus stock trades for $18.64 per share and pays investors their quarterly distributions at an 8.98% dividend yield that you can lock into your portfolio today.
Toronto-Dominion Bank
When it comes to dividend investing, you can practically never go wrong with investing in the Big Six Canadian banks. Toronto-Dominion Bank (TSX:TD) is an easy pick to consider among its peers. At a $217.37 billion market cap, it is not the largest among its peers. However, it is a reliable dividend-paying stock that offers the kind of consistency that long-term income seekers look for when investing in dividend stocks.
As of this writing, TD Bank stock trades for $130.06 per share and pays shareholders their dividends at a 3.32% dividend yield.
Enbridge
Enbridge (TSX:ENB) is another darling holding for income-seeking investors with a long investment horizon. The $160.31 billion giant in the Canadian energy sector is one of the biggest energy infrastructure companies in Canada, with a growing regulated utility business and renewable energy portfolio. Its pipeline network transports a lot of the fossil fuel products made and consumed in North America, making it vital to the regional economy.
Enbridge has a three-decade dividend-growth streak that makes it a staple in investor portfolios. As of this writing, Enbridge stock trades for $73.47 per share and pays investors their quarterly distributions at a juicy 5.28% dividend yield.
Foolish takeaway
Building a portfolio of dividend-paying stocks in a Tax-Free Savings Account (TFSA) can let you enjoy the dividend income without incurring taxes on it. Most of these five TSX dividend stocks are staples in income-focused investment portfolios. Consider allocating a portion of the available contribution room in your TFSA to holding these stocks.
