How to Build the Best Passive-Income Portfolio With Just $15,000

Canadian Dollars

Canadian investors continue to seek out dividend stocks as they look to create passive-income portfolios during this downturn. Yet many Canadian investors might forget (or not know) that returns are also included with passive income.

In fact, it’s incredibly important to consider both returns and dividend income if you’re looking to create a passive-income portfolio. After all, a high dividend yield doesn’t help if it’s only high because shares are dropping.

Therefore, today we’re going to look at how to create the best passive-income portfolio on the TSX today. And here’s how to do it with just $15,000.

Invest long term

Perhaps the best method of investing is to plan on investing for the long run. This means having a goal for your passive-income portfolio besides just “making money.” Once you have a goal in mind, it becomes a lot easier to identify long-term stocks that can get you there.

This means you’ll need to find companies that have already been on the market for a long time, producing returns and dividends that haven’t dropped in that time. These are usually blue-chip stocks — ones that are household names within sectors.

From there, consider finding Dividend Aristocrats. These are companies that have increased their dividend for the last five consecutive years at least. If you can find a blue-chip stock with this Aristocrat status, you’re in for a long-term increase in funds for your passive-income portfolio.

Sectors to watch

Now, you want to look at sectors when it comes to finding stocks for your passive-income portfolio. After all, it’s not going to help you and your passive-income stream if you suddenly see shares drop. This could cause your investment to see a cut in dividend income as well.

Therefore, consider companies that are supported by long-term contracts. This can usually fall in line with infrastructure companies, industrial stocks, energy stocks, and consumer staples. Yet if there is just one I would consider these days, it would be industrial stocks in the real estate sector.

That’s because this is both a growing and stable long-term investment. There is a rise in e-commerce companies as well as a rise in assembly properties. Both are needed as the world shifts to on-demand shipping and electric vehicle production. So, you can look forward to long-term contracts within a growing industry.

A stock to consider

Now, if you’re going to consider one of these industrial stocks, I would look at Granite REIT (TSX:GRT.UN). Granite stock has been doing well even during this downturn. Yet because it’s a real estate stock, shares are down 11% in the last year. That’s despite continued strong quarterly results.

Now, it’s a great deal for an even better dividend. Granite stock trades at just 0.83 times book value, with just 58% of its equity needed to pay off all its debts. And because of the drop in share price, you can get a higher dividend yield at 4.57%. That’s quite a bit higher than the 3.98% average yield of the last five years. And did I mention it comes out monthly?

So, let’s say you purchased this stock with that $15,000. You then see it grow back to 52-week highs and have dividend income to boot. Here is how much passive income you could create.

As you can see, you could create returns of $5,203 and dividend income of $726.40. Together, that’s passive income of $5,929.40! That’s an enormous passive-income stream and one only set to rise out of this bear market.

Should You Invest $1,000 In Granite Real Estate Investment Trust?

Before you consider Granite Real Estate Investment Trust, you’ll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in November 2023… and Granite Real Estate Investment Trust wasn’t on the list.

The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 24 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks

* Returns as of 11/14/23

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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Granite Real Estate Investment Trust. The Motley Fool has a disclosure policy.