Investors seeking a worry-free source of passive income could consider investing in the shares of companies with a solid track record of dividend distribution and growth. Moreover, one should focus on corporations with a resilient business model and a growing earnings base.
The rationale behind this approach is that firms with solid fundamentals and a stellar history of dividend payments generally sustain and increase their payouts, regardless of economic conditions and volatility in the stock market. As a result, these companies emerge as dependable investments to generate reliable passive income.
Thankfully, the TSX has several such high-quality dividend-paying stocks that have been consistently returning cash to their shareholders. Moreover, these companies have well-established businesses, diversified income streams, and continue to generate profitable growth. Further, these companies have a sustainable payout ratio.
With this in the backdrop, let’s delve into a top Canadian dividend stock. By acquiring 1,410 shares of this super dividend stock, one can generate an annual passive income of $5,000.
A top passive-income stock
While there are numerous high-quality dividend stocks to earn a passive-income stream, I’ll restrict myself to Enbridge (TSX:ENB). The company that transports oil and gas is famous for enhancing its shareholders’ returns with higher dividend payments, irrespective of the economic situation.
For instance, Enbridge has a solid history of dividend payments and growth. This Dividend Aristocrat has been distributing dividends for over 68 years. Impressively, this energy infrastructure company has uninterruptedly increased its dividend for 28 years. Further, its dividend has grown at an average annualized growth rate of 10%, the highest among its peers.
Moreover, Enbridge also regularly paid and increased its annual dividend amid the pandemic when most energy companies either suspended or cut their payouts. This shows Enbridge’s commitment to enhancing its shareholders’ value.
Enbridge’s highly diversified income streams, solid demand for its services, and high asset utilization rate support its distributable cash flows (DCF) growth and drive its payouts. In addition, regulated cost-of-service tolling arrangements, long-term contractual arrangements, and power-purchase agreements stabilize its DCF, enabling the company to pay and increase its dividend in all market conditions.
Looking ahead, this pipeline giant will benefit from the multi-billion-dollar secured projects, investments in conventional and renewable energy assets, and utility-like growth projects. Besides growing organically, Enbridge will also benefit from its accretive acquisitions, which will accelerate its growth and drive its DCF per share.
Earn $5,000/year with Enbridge stock
With its robust dividend payment history, diversified revenue streams, resilient business model, and growing cash flows, Enbridge emerges as a top stock to make steady passive income. The table below shows that by buying 1,410 shares of Enbridge, one can earn a passive income of over $1,250.67 per quarter or over $5,000/year.
CompanyRecent PriceNumber of SharesDividendTotal PayoutFrequencyEnbridge$44.261,410$0.887$1,250.67QuarterlyPrice as of 10/26/2023
While Enbridge is undoubtedly a reliable dividend stock for generating a consistent passive income, investors need to avoid concentrating all their funds on a single stock. Instead, one should diversify their investments to reduce risk and earn regular returns.