Relieve Your Stress by Building a Passive-Income Stream!

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There’s a range of symptoms that come from stress, including pains, exhaustion, trouble sleeping, headaches, high blood pressure, stomach/digestive problems, etc.

One of the big causes of stress is money.

Many people are more stressed about money than they were before the pandemic. There will always be economic downturns in which unemployment rates rise and household income diminishes.

Therefore, you can greatly relieve your stress by building a passive-income stream if money is something you worry about.

One of the best places for passive income is established dividend stocks. You don’t want to add more stress by having to watch your stocks all the time.

That’s why you want to buy the blue-chip companies with resilient earnings or cash flow and sustainable payout ratios. You want to buy the kinds of companies that you can forget about and simply earn passive income from.

Here are two Canadian dividend stocks you can consider.

Fortis stock is a trustworthy dividend stock for passive income

Fortis (TSX:FTS)(NYSE:FTS) stock has increased its dividends for 47 consecutive years. Indeed, it is a TSX stock with one of the longest dividend-growth streaks! With that kind of track record, you can imagine how quality its earnings are through good and bad times.

Over the last decade, Fortis has diversified into the United States opportunistically when Canadian dollars were relatively strong against U.S. dollars. It now generates more than 60% of its earnings from the south.

Fortis has 10 regulated utility businesses. They include 99% regulated utility assets, 93% transmission and distribution assets, and 3.3 million electric and gas customers — altogether, translating to stable earnings. Combining reliable earnings and the utility’s payout ratio in the low 70% range makes FTS’s dividend sustainable.

It would be best to pick up the dividend stock at a yield of 4% or higher. However, now is not a bad time either. At $52.88 per share, it yields 3.8%.

According to its usual dividend-increase schedule, it’ll declare a dividend increase in September. On the 6% dividend-growth rate that management projects through 2025, investors are looking at a forward dividend yield of just over 4% from a purchase today.

Get passive income from Enbridge stock

Enbridge (TSX:ENB)(NYSE:ENB) stock is another favourite dividend stock of passive-income investors. Over the years, it has transitioned from a high-growth dividend growth stock to more of an income stock.

Steady dividend increases and a reasonably valued stock have pushed ENB stock’s yield to 7.4%. That is a very attractive income in a low interest rate environment. Compare that to the best five-year GIC rate that’s going for 1.8% right now.

Enbridge stock provides 311% more income!

Another benefit of holding Enbridge stock is that it will likely continue increasing its dividend. Investors can look to its recent dividend growth as a gauge for future increases. ENB stock last declared a dividend increase of about 3% in December 2020.

Enbridge’s cash flow is one of the most defensive in the energy sector. About 98% of its cash flows are regulated or secured by contracts and about 95% of its customers are investment grade.

Based on the company’s 2021 distributable cash flow guidance, its payout ratio is estimated to be sustainable at about 69% this year.

The Foolish takeaway

Between the two dividend stocks, investors can get a passive income with an average yield of 5.6% today.

Notably, you should be prepared to partner with these companies for at least several years, as the whole point is to generate passive income without having to lift a finger.

Over time, you should see these stocks appreciate, as they trade at good valuations now, and they’re expected to grow their earnings or cash flow at a stable pace.

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More reading

  • The 3 Best TSX Dividend Aristocrats to Buy Under $50
  • Enbridge (TSX:ENB) vs. Suncor (TSX:SU): Which Energy Stock Is a Better Buy?
  • 2 Top Canadian Stocks Down at Least 30% to Buy Right Now!
  • 2 Safe Stocks That Never Drop!
  • Canada Revenue Agency: How to File 2020 Income Tax Returns

Fool contributor Kay Ng owns shares of Fortis. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends FORTIS INC.

The post Relieve Your Stress by Building a Passive-Income Stream! appeared first on The Motley Fool Canada.

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