Here’s how you can bet $10,000 today to generate nearly $700 in annual passive income.
Gibson Energy shares
The first pillar of this passive income portfolio is Gibson energy (TSX:GEI). While the stock has delivered a (still respectable) total return of 10.6% over one year, the real story for income investors is the generous dividend that yields 6.9% today.
Gibson Energy is a $4.1 billion infrastructure powerhouse known for its massive oil export terminals, including the Hardisty terminal. Think of this company as a toll booth for the energy sector. It collects, stores, sells and distributes raw and refined products. The company recently reported record throughput and continued growth at its Canadian and US terminals for the third quarter of 2025.
Why is this happening now? As oil prices fall, producers are responding by increasing production volumes to stabilize their cash flows. This is great news for Gibson, as the volume growth translates directly into higher revenues for the terminals and marketing division. The company already handles approximately 25% of Western Canadian sedimentary basin marketing and operates the second largest crude oil export terminal in the United States.
Financial discipline is crucial here. Gibson reported 10% year-over-year growth in distributable cash flow per share in the third quarter of 2025. Don’t be put off by the 183% profit payout ratio. This metric is distorted by non-cash costs on its vast assets. Dividend safety is accurately measured by the free cash flow payout ratio. Gibson has paid out 85% of its distributable cash flow over the past year, meaning the dividend is well covered.
Plus, this is a payout you can rely on, with more than 95% of infrastructure revenue coming from take-or-pay and fee-for-service contracts, and a series of six-year dividend increases.
Royalty Ownership: The Royalty King
To complement the oil infrastructure play, let’s look at Royalties owned (TSX:FRU). This stock offers a juicy annual dividend yield of 7.2%, paid out as a monthly dividend of $0.09 per share.
Freehold has a brilliant, low-risk business model. It manages a portfolio of mineral titles and royalties on oil and gas properties in North America. The beauty of this model is its simplicity. Freehold incurs no capital costs, no operating costs, and no project abandonment costs.
The royalty company simply collects checks from some of the best operators in the industry, including Canadian natural resources, ExxonMobilAnd Devon Energy. This gives investors in Freehold Royalties shares exposure to large conventional and shale basins with more than 380 counterparties, without the headaches of running an oil company.
Is the proceeds safe? In a third-quarter investor presentation, management stated that the dividend is well supported as long as WTI oil prices remain at or above US$50 per barrel (WTI). If you think oil will maintain that level over your investment horizon, you can harvest that 7.2% yield yourself.
How to Invest $10,000 to Earn a Passive Income of $700
Here is the passive income investment strategy: Divide your $10,000 investment into two equal positions of $5,000 as shown below:
| Stocks to buy | Recent price | Number of shares | Dividend per share | Total dividend | Frequency | Total annual dividend |
| Gibson energy (TSX:GEI) | $25.25 | 198 | $0.43 | $85.14 | Quarterly | $340.56 |
| Royalties owned (TSX:FRU) | $15.07 | 331 | $0.09 | $29.79 | Monthly | $357.48 |
| Total | $698.04 |
The initial stake could earn $698.04 or more in 2026. Dividend growth and consistent reinvestment can grow the portfolio and increase your returns over time. Using the Rule of 72, the 7% average annual return that this two-stock portfolio “promises” could double your portfolio in just over a decade. Capital gains can shorten the doubling period.
By combining the stability of the infrastructure with the high-margin cash flow from royalties, you can create a diversified revenue machine that is poised for long-term success.
#Invest #dividend #stocks #passive #income