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Buying and holding stocks is a great way to generate more passive income. Unlike other passive-income investments, such as a small business, an investment property, or even GICs (Guaranteed Investment Certificates), stocks are liquid and cheap to buy and sell.
Now, this also means that stocks can be volatile. However, that can create many opportunities to pick up beaten-down stocks with attractive yields. If you have $10,000 to invest today, here’s a quick four-stock portfolio that could earn you up to $525 in passive income a year.
A top stock for passive-income growth
With a $37.6 billion market cap, TELUS (TSX:T) is one of Canada’s largest telecommunications providers. While recent mergers have made Canada’s communications sector more competitive, TELUS is distinguished by its strong network and diverse digital services businesses.
As of writing, TELUS stock is yielding 5.6%, which is above the five-year average of 4.85%. TELUS has grown its annual dividend by more than 8% per year on average. The company is completing a large capital round and expects to earn a large amount of surplus cash. That means more dividend increases could be coming.
Put $2,500 in TELUS stock, and you could earn $34.80 per quarter, or $139.20 per year.
The best passive-income stocks if you like real estate
If a rental or income property is out of reach, you can still own high-quality investment properties through real estate investment trusts (REITs). Two of my favorite stocks for monthly passive income are Dream Industrial REIT (TSX:DIR.UN) and BSR REIT (TSX:HOM.UN)
Dream operates 321 logistics, warehouse, and distribution properties across Canada and Europe. It also manages two joint venture partnerships. Industrial real estate has been one of the strongest asset classes over the past five years.
Demand is high in the Dream’s core cities, and these are seeing double-digit rental rate growth. This translates to +9% adjusted funds from operation (AFFO) per unit growth over the past few years.
Currently, Dream is yielding 4.95%. Put $2,500 in its stock, and you’ll earn $10.21 per month, or $122.50 in passive income per year.
BSR REIT operates a portfolio of resort-style apartment complexes in Texas and Oklahoma. Its properties are strategically located in some of the fastest growing jurisdictions in the United States. That’s a huge tailwind for supporting high occupancy and strong rental rate growth.
As of writing, BSR is trading at a 40% discount to its net asset value, so you’re buying the portfolio at a significant discount to its private market value. The REIT trades with a 4% distribution yield. A $2,500 investment earns you $8.40 monthly passive income, or $100.74 annually.
A high yield energy infrastructure stock
If you’re looking for a safe passive-income stock with a high dividend, Pembina Pipeline (TSX:PPL) could be a solid pick. It operates a mix of pipelines, gas processing plants, export terminals, and energy trading businesses. Its dividend is fully covered by its contracted sources of income.
Pembina has an industry-leading balance sheet, which should give it the flexibility to deploy capital to growth opportunities (LNG export terminal, pipeline expansion and acquisition). You may have to be patient for this strategy to unfold, but the 6.4% dividend yield pays you while you wait.
Invest $2,500 in Pembina stock, and you’ll earn $40.71 per quarter, or $162.87 per year.
COMPANY | NEW PRICES | NUMBER OF PARTS | DIVIDEND | TOTAL PAYOUT | FOR the most part |
TELUS Corp. | $26.00 | 96 | $0.3625 | $34.80 | every quarter |
Dream Industrial REIT | $14.22 | 175 | $0.05833 | $10.21 | Every month |
BSR REIT | $17.07 | 146 | $0.0575 | $8.40 | Every month |
Pembina Pipeline | $40.76 | 61 | $0.6675 | $40.71 | every quarter |