With inflation continuing to soar, Canadians are eagerly searching for different ways to earn passive income. While small businesses/franchises, side gigs, and private real estate investments (like a condo or vacation rental) can be obvious options for passive income, they can also take a tonne of work, time, and money to manage.
Investing in stocks can be a great way to earn passive income
Investing in the stock market for passive income is a great alternative. You need some initial capital and a decent amount of investment due diligence.
Other than that, often the best thing an income investor can do is sit on their hands and let their stocks do the work for them. Now, stocks can be very volatile over the short term, but if you take a long-term (five or more years) approach, you can earn really solid returns.
If I had a long investment horizon and $20,000 to invest, here are three TSX stocks Iâd consider buying today. You could earn nearly $800 a year with this mini passive-income portfolio.
Brookfield Infrastructure: A diversified utility for growing passive income
Brookfield Infrastructure Partners (TSX:BIP.UN) stock is down 17% over the past year. Its dividend yield has jumped from around 3.3% last year to over 4.8% right now. In fact, this stock has not been this cheap since early 2019 (other than the March 2020 market crash). Right now, it is trading for 12.8 times AFFO (adjusted funds from operation) versus its five-year mean of 16.
Investors get to own a diverse portfolio of highly contracted/regulated assets. These include railroads, ports, home utility services, toll roads, natural gas processing plants, pipelines, and cell towers.
If you put $6,666 ($20,000 divided by three) into this stock today, you would earn $79.42 every single quarter. The company has a great record growing its dividend, so your passive income should grow, too.
CNR: A long-term, dividend-growth stock
Canadian National Railway (TSX:CNR) may not pay the biggest stream of passive income, but its dividend has grown impressively. Ever since 1996, CN has paid a dividend. Since then, its dividend has grown from $0.067 per share to $3.16 per share today. Thatâs a 4,600% increase!
CN has a dominant transport network across Canada and the United States. Its track is economically essential and simply irreplaceable. As a result, it has a great competitive position and strong pricing power. Over the past decade, earnings per share have risen around 10% annually.
If you put $6,666 into this stock, youâd only earn $33.73 of passive income quarterly. However, CN stock is a total-return story, so you own it for both capital gains, share buybacks, and dividends.
Canadian Natural Resources: A value-priced dividend grower
Speaking about stocks that have paid long-term dividends, Canadian Natural Resources (TSX:CNQ) ought to be on that list. It has increased its dividend by an approximate 20% compounded annual rate for 23 years! After a recent 10% decline, CNQ stock pays a 5% dividend yield.
Even though CNQ is a volatile stock, its operations are very consistent. It is Canadaâs largest energy company with around one million barrels of oil equivalent per day in production.
The company has nearly 30 years of reserves and an incredibly low cost to produce. CNQ has been extremely shareholder friendly, and executives hold a large stake in the business.
A $6,666 investment would earn $84.60 of passive income every quarter. If oil prices move to the US$80 range, there is a good chance for some special dividends (like in 2022).
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Brookfield Infrastructure Partners | 43.66 | 152 | $0.5225 | $79.42 | Quarterly |
| Canadian National Railroad | 156.11 | 42 | $0.79 | $33.73 | Quarterly |
| Canadian Natural Resources | 70.60 | 94 | $0.90 | $84.60 | Quarterly |
The post How I’d Invest $20,000 to Earn Reliable Passive Income Today appeared first on The Motley Fool Canada.
Free Dividend Stock Pick: 7.9% Yield and Monthly Payments
Canadaâs inflation rate has skyrocketed to 6.9%, meaning youâre effectively losing money by investing in a GIC, or worse, leaving your money in a so-called âhigh interestâ savings account.
Thatâs why weâre alerting investors to a high-yield Canadian dividend stock that looks ridiculously cheap right now. Not only does it yield a whopping 7.9%, but it pays monthly!
Hereâs the best part: Weâre giving this dividend pick away for FREE today.
Claim your free dividend stock pick
* Percentages as of 11/29/22
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More reading
- The Best Way to Make $1 Million When a Bull Market Returns
- 3 High-Yield Energy Stocks to Earn Passive Income for Years
- Buy These TSX Dividend Shares Next Week
- 3 of the Safest Dividend Stocks in Canada
- Need Passive Income? Turn $5,000 Into $140 Every Month
Fool contributor Robin Brown has positions in Brookfield Infrastructure Partners. The Motley Fool recommends Brookfield Infrastructure Partners, Canadian National Railway, and Canadian Natural Resources. The Motley Fool has a disclosure policy.