Who doesn’t like to earn without working? While you can work $40 hours a week at a young age, staying focused for so long gets difficult as you grow old. Also, you don’t want to spend your lifetime working. We can learn something from ants. They accumulate nectar during the spring and enjoy honey in the winter. While you are still earning a growing active income, you can invest money in stocks that can give you future passive income in your winter years.
A passive income stock you can buy without a doubt
The Canadian stock market has a rich collection of dividend aristocrats that have funded the retirement of many early investors.
Enbridge (TSX:ENB) has been paying dividends for over 69 years. Over these years, it underwent several economic crises and wars, perfecting its low-risk business model to tackle them effectively. And the outcome is 29 consecutive years of dividend growth. It is now transitioning from oil to natural gas and renewable energy as oil is a depleting industry.
Enbridge is acquiring three U.S. gas utilities and selling a 50% stake in the Alliance natural gas pipeline, Aux Sable processing plant, and NRGreen joint ventures to Pembina Pipeline for $3.1 billion. Between all these transitions, Enbridge is committed to growing its dividend by 3–5% annually.
Now that you know the qualities of this passive income stock, how you make the best of it is up to you. Here’s an investment strategy for Enbridge.
How to invest $250 a month for a $4,433 yearly passive income
Enbridge stock is a range-bound stock hovering between $40–$55. There are some outliers, but it has maintained this range since 2012. You can invest $250every month in Enbridge, irrespective of the price. The market volatility will help you reduce the cost per share over time.
The key to planning your investment is taking conservative estimates. If you underestimate and the stock over-delivers, it could give your financial plan some flexibility.
Year
Invested Amount
Enbridge Share count @$55/share
Enbridge Share count
Enbridge Dividend per share (3% CAGR)
Enbridge dividend
2024
$3,000
55
55.0
$3.65
$200.75
2025
$3,201
58
113
$3.76
$425.56
2026
$3,426
62
175
$3.87
$679.50
2027
$3,680
67
242
$3.99
$966.71
2028
$3,967
72
315
$4.11
$1,292.00
2029
$4,292
78
393
$4.23
$1,660.96
2030
$4,661
85
477
$4.36
$2,080.13
2031
$5,080
92
570
$4.49
$2,557.17
2032
$5,557
101
671
$4.62
$3,101.06
2033
$6,101
111
782
$4.76
$3,722.38
2034
$6,722
122
904
$4.91
$4,433.60
How to earn $4,433 in annual passive income
Assuming your average cost per share is $55, a $3,000 investment in a year ($250 x 12 months) can buy you 55 shares of Enbridge. If the company increases its 2024 dividend by 3%, you will receive $3.65 per share, accumulating $200 in passive income from 55 shares.
Instead of taking a payout, you can use that money to accumulate more shares of Enbridge. The company has paused its dividend reinvestment plan, but you can buy its shares manually in your Tax-Free Savings Account (TFSA) without having to pay tax on dividend income.
In 2025, your $3,000 investment plus $200 dividend income can buy you 58 Enbridge shares at $55 per share price. In 10 years, you can accumulate 904 shares that could pay an estimated dividend per share of $4.91. I have rounded off the share count as you cannot buy half a share. At the end of 2034, you could earn $4,433 in yearly passive income.
A bullish scenario
The above estimates are conservative. In the best-case scenario, Enbridge could grow its dividend by 5% in a few years, and your average cost per share could fall to $50 or $52 if you do some opportunistic buying in a bear market and lock in a higher yield.
As I said before, every stock has its features. It is up to you how you use it.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
