Fortunately, the market is full of great options to achieve that passive income goal. And with a nice $20,000, investors can generate a juicy $1,000 per year in passive income.
Here are the stocks to pick and why they belong in your portfolio.
Option 1: Bank of Nova Scotia
You can’t say you’ve put together a list of TSX stocks to generate passive income without thinking about at least one of the big bank stocks. Bank of Nova Scotia (TSX:BNS) is the bank stock to add to that list.
As Canada’s most international bank, Scotiabank offers a striking balance between a stable domestic market to generate revenue and a growing international segment to drive growth.
In recent years, that growth focus has shifted from more volatile (although higher growth) markets in Latin America to more established markets in North America. The result is a greater focus on the US and Mexico to drive that international growth.
And it works.
In its most recent quarter, Scotiabank reported adjusted net income of $2,518 million. That’s an impressive improvement over the $2,191 million reported in the same quarter last year.
The international segment was a solid part of those profits, posting $716 million in the quarter, reflecting a 7% increase year over year.
These solid results help Scotiabank to continue investing in growth initiatives while paying a very attractive quarterly dividend.
That dividend is a big reason why Scotiabank is one of the TSX stocks for passive income seekers. At the time of writing, the bank offers a 4.7% yield, and Scotiabank has been paying that dividend without fail for over 190 years.
Complementing that appeal, Scotiabank has also provided investors with annual increases to that dividend dating back nearly three decades.
Putting $10,000 into Scotiabank will give you an income of just over $460. That’s not enough to retire, but it’s enough to generate a few shares each year through reinvestment.
In a decade of some modest increases, that has grown to almost $600, all without investing another cent.
Option 2: Enbridge
Another example of one of the TSX stocks with passive income appeal is Enbridge (TSX:ENB). Enbridge is one of the largest energy infrastructure companies in the market with a broad range of business segments.
The majority of Enbridge’s revenue comes from its pipeline business, and for good reason. The segment, which includes both crude and natural gas elements, transports huge quantities of both every day.
Enbridge transports so much that Enbridge is one of the most defensive choices on the market due to its enormous volumes.
Specifically, the company transports one-third of all crude oil produced in North America through its network. As for natural gas, that number is one-fifth of the U.S. market’s natural gas needs.
Impressively, the segment continues to grow and is just one of Enbridge’s business segments. In addition to its multi-billion dollar project backlog, the company also has a growing renewable energy business and a natural gas business.
Both generate a reliable and recurring income stream that, like Scotiabank, leaves room for growth and an impressive dividend.
That dividend is the real reason this TSX stock is loved by passive income investors.
At the time of writing, Enbridge pays a robust 5.57% yield. This means that an investment of $10,000 will generate an income of $550.
Enbridge has also achieved three consecutive decades of annual increases and plans to continue that cadence.
In other words, Enbridge is a perfect buy-and-forget option for any portfolio.
TSX Stocks for Passive Income Generation
A joint investment of $20,000 in Enbridge and Scotiabank could provide a stable, growing source of income for long-term investors. Here’s how that works out.
| Company | Recent price | Number of shares | Dividend | Total payout | Frequency |
| Bank of Nova Scotia | $95.00 | 105 | $4.40 | $462 | Quarterly |
| Enbridge | $68.25 | 146 | $3.77 | $550.42 | Quarterly |
| Total | $1,012.42 |
One or both of these stocks would do well in any well-diversified portfolio.
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