Are you looking for sustainable passive income in 2026?
If so, you need to pick stocks that lend themselves to that goal.
Growth stocks often deliver good returns, but usually don’t pay out dividends.
Low-quality dividend stocks often pay high dividends, but they aren’t sustainable.
You get the best long-term dividends from high-quality moat stocks that have reasonable payout ratios. In this article, I will explore three such stocks that you can count on for passive income in 2026.
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Fortis
Fortis Inc (TSX:FTS) is a Canadian utility stock that has a 3.3% dividend yield. The company has a 74% payout ratio, indicating that it pays out about three-quarters of its earnings as dividends. This is a fairly sustainable payout ratio – especially by utility standards – indicating that Fortis can afford to keep the dividend coming.
Fortis is well known for having increased its dividend marginally every year for the last 52 years. This is one of the best dividend growth track records of any TSX company.
Fortis achieves its famous dividend consistency by several means. First, it keeps its payout ratio within reason. As mentioned previously, the payout ratio is only 74%, fairly low for a utility. Second, Fortis invests conservatively in growth, growing its rate base a little every decade without bankrupting itself with debt. Finally, the company is generally well run, which helps it and its shareholders stay out of trouble. These advantages have made Fortis a very sustainable stock over the long run.
TD Bank
The Toronto-Dominion Bank (TSX:TD) is a Canadian bank whose shares are the very definition of sustainable. TD stock yields about 3%, which is the lowest yield they have sported in a while, thanks to the company’s conservative dividend policy. TD only pays out about 49% of its earnings as dividends, which is a pretty conservative percentage. Also, TD stock has risen considerably over the last year. Both of these factors combined have sent TD’s dividend tumbling. However, there are other factors that argue for TD’s dividend having the potential to rise. These include:
- NII growth potential. Canadian mortgages from the pandemic era are being re-financed right now, at lower rates than they were issued at. This should contribute some revenue and net interest income (NII) growth to TD.
- Investment banking growth. TD Bank has an investment banking segment, one it bolstered recently by buying out the famous U.S. bank Cowen. Because of its prudent M&A strategy and other factors, TD’s investment banking division is experiencing a lot of growth, with earnings up 29% last quarter.
For these reasons, I think TD’s stock will keep performing well, and its dividend will probably increase.
Brookfield Asset Management
Brookfield Asset Management (TSX:BAM) is a Canadian asset management company. It is part of the legendary Brookfield Corp ecosystem. The company is known for its asset-light, relationship-heavy business model. Basically, the company offers alternative asset funds and similar exotic investment products to high-net-worth investors. Such funds bring in big fee income for Brookfield and Brookfield Asset Management. BAM stock has a 4.1% yield today, and the payout has been rising over the long term.
