This bear market is a gift for value seekers. You can find so many good stocks on the TSX today it is true. But investing in individual stocks can be expensive and frankly quite risky. But what if you don’t want to miss out on anything, but still want to earn passive income?
Enter the infrastructure
I would look at the infrastructure sector right now. No matter what, infrastructure is still needed. Phone lines, energy assets, roads, sewers, all those necessities we take for granted are powered by infrastructure companies. And that means they’re also backed by the government, with projects that won’t be canceled in the short term.
But here is the challenge. Many companies active in the infrastructure sector rely solely on a of these areas. Maybe they just do energy, or roads, or phones – you get the picture. So how can you participate in all of this? Better yet, how can you get great returns, as well as passive income through dividends?
Consider an exchange-traded fund
An exchange-traded fund (ETF) is a great option. Not only could you get a diverse set of infrastructure assets, but you overall those too. For this I would consider the BMO Global Infrastructure ETF (TSX: ZGI). The company has major investments in everything from pipeline companies like Enbridgeto cell tower companies like International Crown Castle, and all the rest. You can earn income from all those stable stocks, worry-free.
Why? Because you pay a small management fee to allow someone other to worry about investing in this gigantic sector for you. These are the experts who manage this low volatility ETF. An ETF whose shares have remained stable this year, and up 10% last year. And right now, it’s offering a dividend yield of 3.34%.
Make that thousand
With stocks hovering around the same price as at the start of 2022, now is a great time to buy stocks for a future boost. Stocks have risen 176% over the past decade, recording a compound annual growth rate (CAGR) of 10.69%.
But instead of looking at how long it will take you to make those returns, let’s see how much it would take to create $1,000 of passive income. To achieve this, let’s look at the dividend yield of 3.34%. It’s $1.32 per share annually. So to create $1,000 every year would be like investing in 758 stocks at a cost of $32,450 on the Toronto Stock Exchange today.
Not only is this dividend income guaranteed, but you can expect it every year beyond the returns, but it should also increase! In fact, the dividend has grown at a CAGR of 9.35% over the past decade. So if you were to invest that $32,450 today and see the same growth, in just five years, you could have a portfolio worth $61,417 by simply reinvesting your dividends. It’s almost double your initial investment, all from a safe, passive income-generating stock.