Generate a Comfy Passive-Income Stream

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Generating a comfy passive-income stream remains one of the high-level objectives of every long-term investor. Fortunately, the market gives us plenty of options to achieve that goal.

Here are some of the great options you may want to consider adding to your portfolio.

Stability comes at a cost

Attaining that comfy passive-income stream comes at a cost — or so it would seem. Many investors see that stabile income stream comes with a lower yield. When it comes to the first stock on this list, that couldn’t be further from the truth.

Enbridge (TSX:ENB)(NYSE:ENB) is an energy infrastructure giant that should be on everyone’s radar. Enbridge is best known for its massive pipeline network, which generates piles of cash, but that isn’t everything that the company does.

Specifically, the pipeline network provides a passive and recurring revenue stream for Enbridge, much like a tollbooth on a highway generates revenue. In total, the segment transports a whopping 30% of the crude generated in North America as well as one-fifth of the natural gas needs of the United States. This factor alone makes Enbridge a superb investment, but there’s still much more.

Enbridge also operates a growing renewable energy business. The company has invested over $8 billion into the segment over the past two decades. Today, the renewable energy segment boasts a capacity of over five GW of zero-emission energy with facilities located in Europe and North America.

But how does this help generate a comfy passive-income stream? Enbridge pays out a juicy quarterly dividend with a 6.25% yield. Adding to that is Enbridge’s precedent of providing generous annual upticks to that dividend spanning back over a decade.

Comfortable, cozy income

Another segment that offers a means to generate a comfy passive-income stream is the telecom business. Canada’s telecoms are great investment options, boasting millions of subscribers, little competition, serious growth potential, and generous dividends.

But which telecom should investors turn to? For a comfy passive-income stream, the telecom to buy is BCE (TSX:BCE)(NYSE:BCE). BCE is one of the largest of the big telecoms with national coverage for its core subscription services.

Those services generate a stable and recurring revenue stream, which is what investors should be looking for. Adding to that appeal is the fact that BCE also operates a massive media segment which includes dozens of radio and TV stations. Also noteworthy is that the media arm is complementary to the core subscription business.

In terms of income potential, BCE has provided investors a dividend for over a century without fail. In fact, the current 5.36% yield is one of the best paying on the market. Additionally, like Enbridge, BCE has an established precedent of providing generous annual upticks to that already juicy yield.

A really comfy passive-income stream is possible

You can’t compile a list of stocks to generate a comfy passive-income stream without mentioning a utility. Utilities are great investments; they generate a recurring and stable revenue stream that is backed by decades-long regulated contracts.

In short, they are some of the most stable investments on the market and are largely immune to market volatility. But which utility should investors buy?

That would be Canadian Utilities (TSX:CU). Canadian Utilities operates a stable business that includes both generation, and distribution segments. The company is also investing heavily into growing its business further.

Turning to income, Canadian Utilities really impresses. Factoring in the uptick earlier this year, Canadian Utilities became the only stock in Canada to be classified as a Dividend King with 50 years of consecutive annual upticks.

That juicy dividend currently provides a yield of 4.66%, making it one of the core stocks you’ll want to help generate a comfy passive-income stream.

Final thoughts

No investment is without risk, but there are some stocks which are established, and that risk is minimal. All three of the stocks noted above fall into that category and in my opinion, should be core holdings in every well-diversified portfolio.

The post Generate a Comfy Passive-Income Stream appeared first on The Motley Fool Canada.

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Before you consider BCE, we think you’ll want to hear this.

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* Returns as of 4/14/22

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More reading

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Fool contributor Demetris Afxentiou has positions in Enbridge. The Motley Fool recommends Enbridge.

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