For Canadians aiming to bolster their income streams, the strategy of investing for passive income has gained considerable traction. This approach involves strategically allocating funds into dividend-paying stocks, allowing investors to receive regular payouts — all while also holding the potential for the underlying value of their investments to appreciate over time. This dual benefit can be particularly appealing in today’s economic climate. Let’s delve into two prominent companies listed on the TSX that boast attractive dividend yields and have a demonstrated history of consistent performance, making them potential candidates for a passive-income portfolio.
Scotiabank
First and foremost, we have Bank of Nova Scotia (TSX: BNS), widely recognized as Scotiabank. As one of Canada’s esteemed Big Five banks, Scotiabank possesses a long and storied history of providing reliable dividend income to its shareholders. As of writing, the TSX stock offers a dividend yield hovering around 6.2%, a figure that is undeniably appealing to investors whose primary focus is on generating a steady income stream from their investments.
Scotiabank’s consistent financial performance, coupled with its robust overall financial health, has been instrumental in cultivating its reputation as a dependable and consistent dividend payer within the Canadian financial landscape. Moreover, its diversified business operations provide a degree of stability. That’s thanks to Scotiabank spanning various financial services and extending into international markets, particularly in Latin America. These can underpin its ability to maintain and potentially grow its dividend payouts over the long term.
TELUS
The second TSX stock under our consideration is TELUS (TSX: T), a leading telecommunications powerhouse in Canada. TELUS offers a comprehensive suite of services, which now encompass wireless communications, data solutions, and internet connectivity. Renowned for its unwavering commitment to superior customer service and its ongoing efforts to expand and upgrade its technological infrastructure, TELUS has also garnered recognition for its attractive and consistently distributed dividend payouts.
As of writing, the TSX stock provides a dividend yield in the vicinity of 7.85% — a rate that holds considerable appeal for individuals seeking a reliable and steady flow of income from their investments in the telecommunications sector. TELUS’s strong market position, coupled with the essential nature of its services in today’s digital age, provides a solid foundation, especially for its continued financial performance and its capacity to sustain its dividend payments. Furthermore, the TSX stock’s investments in emerging technologies and its focus on innovation suggest potential for future growth. This could further enhance its attractiveness as a long-term dividend-paying investment.
Earning passive income
To illustrate the potential for passive income generation, let’s consider a hypothetical scenario where an investor allocates $10,000 Canadian to each of these two stocks, resulting in a total investment of $20,000.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
| BNS | $66.34 | 151 | $4.24 | $640.24 | quarterly | $10,000 |
| T | $20.60 | 485 | $1.61 | $780.85 | quarterly | $10,000 |
When these potential income streams are combined, investors can bring in approximately $1,421.09 per year in passive income, providing a tangible supplement to an investor’s regular earnings. It is important to note that dividend yields and payouts can fluctuate based on a variety of factors.
Bottom line
Together, investing in established dividend-paying TSX stocks such as Scotiabank and TELUS presents a compelling opportunity for Canadians to generate a steady stream of passive income. Both of these companies have demonstrated a notable degree of resilience throughout various economic cycles and have exhibited a clear commitment to returning value to their shareholders through consistent and attractive dividend payouts.
However, as with any investment endeavour, it remains of paramount importance for investors to conduct their own thorough and diligent research and to strongly consider consulting with a qualified financial advisor. This crucial step will help ensure that any investment decisions made are fully aligned with their individual financial objectives, their personal risk tolerance levels, and their overall investment strategy. By carefully considering these factors, investors can make informed choices that best position them to achieve their passive-income goals while navigating the inherent dynamics of the stock market.