Advertisement
Canada markets open in 29 minutes
  • S&P/TSX

    21,516.90
    -94.40 (-0.44%)
     
  • S&P 500

    5,487.03
    +13.80 (+0.25%)
     
  • DOW

    38,834.86
    +56.76 (+0.15%)
     
  • CAD/USD

    0.7299
    +0.0002 (+0.03%)
     
  • CRUDE OIL

    81.87
    +0.30 (+0.37%)
     
  • Bitcoin CAD

    90,353.44
    +1,063.76 (+1.19%)
     
  • CMC Crypto 200

    1,370.25
    -12.41 (-0.90%)
     
  • GOLD FUTURES

    2,355.10
    +8.20 (+0.35%)
     
  • RUSSELL 2000

    2,025.23
    +3.22 (+0.16%)
     
  • 10-Yr Bond

    4.2610
    +0.0440 (+1.04%)
     
  • NASDAQ futures

    19,998.50
    +79.25 (+0.40%)
     
  • VOLATILITY

    12.57
    +0.09 (+0.72%)
     
  • FTSE

    8,233.14
    +28.03 (+0.34%)
     
  • NIKKEI 225

    38,633.02
    +62.26 (+0.16%)
     
  • CAD/EUR

    0.6807
    +0.0020 (+0.29%)
     

How to Use Canadian Dividend Stocks to Build a Passive-Income Stream

Various Canadian dollars in gray pants pocket
Image source: Getty Images

Written by Jitendra Parashar at The Motley Fool Canada

Have you ever thought of building a passive-income stream that can help you in difficult economic times? If yes, you’re not alone. As economic uncertainties have increased the market volatility lately, more investors than ever are considering creating a reliable source of passive income.

While having a source of reliable passive income might not make you super rich overnight, it has the potential to grow your wealth steadily in the long run and provide a safety net for your financial needs. Although there are many ways to generate passive income, dividend investing could arguably be one of the easiest and most flexible ones.

ADVERTISEMENT

In this article, I’ll highlight two of the best Canadian dividend stocks you can buy in 2023 to build a reliable passive-income stream.

A reliable Canadian dividend stock for passive income

While new investors may find it difficult to pick the right stocks for their portfolio based on their risk appetite, it’s always wise to stick to fundamentally strong, large-cap stocks with proven track records of rewarding their investors with increasing dividends. This principle can help you filter out weak stocks that may increase your risk profile in the long run.

Keeping that in mind, Enbridge (TSX:ENB) could be one of the most attractive Canadian dividend stocks you can consider to earn passive income each quarter. The shares of this Calgary headquartered energy transportation have seen an 8% value erosion in 2023 so far to currently trade at $40.71 per share with $97.7 billion in market cap.

The recent decline in ENB stock could mainly be attributed to big declines in the prices of energy products, including crude oil and natural gas, in recent months amid fears of slowing global economic growth. At the current market price, Enbridge offers an attractive 7.3% annualized dividend yield and distributes its dividend payouts every quarter.

Besides its well-established oil pipelines and natural gas transmission business, Enbridge has advanced its strategy to increasingly focus on renewable energy and crude oil export businesses. Given that revenue-diversification strategy, you can expect its share prices to yield healthy returns in the long run and help you earn reliable passive income at the same time.

And a banking giant to invest in for passive income

Royal Bank of Canada (TSX:RY) could be another great dividend stock to consider to create a trustworthy passive-income stream in Canada. The Toronto-headquartered banking giant currently has a market cap of $167 billion, as its stock trades at $121.59 per share after declining by 4.5% on a year-to-date basis due mainly to the broader market weakness. RY offers an attractive 4.4% annual dividend yield at this market price.

While the ongoing macroeconomic uncertainty and challenging market environment have driven Royal Bank’s provisions for credit losses higher in recent quarters, its long-term dividend growth should largely remain unaffected by temporary challenges due mainly to its solid financial position and continued loan growth. That’s why I believe RY can keep posting strong financial growth in the coming years, which should help its stock inch up.

The post How to Use Canadian Dividend Stocks to Build a Passive-Income Stream appeared first on The Motley Fool Canada.

Should You Invest $1,000 In Enbridge?

Before you consider Enbridge, you'll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in May 2023... and Enbridge wasn't on the list.

The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 23 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks * Returns as of 5/24/23

More reading

The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

2023