Passive Income: 3 Dividend Stocks to Make Money While You Sleep

Energy stocks like Cenovus Energy (TSX:CVE)(NYSE:CVE) can pay you while you sleep.

| More on:
money while you sleep

Image source: Getty Images

Do you want to make money while you sleep?

If so, dividend stocks are the way to go.

Many ads online promote opportunities to make “passive income,” but the vast majority of them aren’t legit. The best of them require heavy amounts of work, the worst are outright scams.

Dividend investing is the one passive income opportunity that is actually real. You simply invest some money up front and then collect cash payouts for as long as the stock continues paying dividends. It’s one of the best ways to grow your wealth over time. With that in mind, here are three Canadian dividend stocks that can pay you money while you sleep.

Suncor Energy

Suncor (TSX:SU)(NYSE:SU) is a Canadian energy stock with a 4.4% dividend yield. As an integrated energy company, it makes more money as the price of oil rises. This year, the price of oil has generally been going up. In recent weeks it has been going down, but the current prices are still historically high. Because Suncor makes money by selling crude oil and gasoline, it earns handsome profits in market environments like this one. The proof is in the pudding. In its most recent quarter, Suncor delivered:

  • $1.55 billion in net income, up from a loss
  • $1.29 billion in operating income, up from a loss
  • $3.1 billion in adjusted funds from operations (AFFO), up 157%
  • $3.7 billion in net debt reduction

TD Bank

The Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is a big bank stock with a 3.7% yield. This company has a lot of things going for it. It’s Canada’s second-biggest bank, which gives it a strong competitive position. It also has a vast and growing U.S. retail business, the ninth-largest in the United States. TD is about to become the sixth-biggest U.S. bank with its upcoming acquisition of First Horizon Corp. The First Horizon acquisition will provide TD with billions in new interest bearing assets. It may increase TD’s dividend paying ability over the long run. Additionally, TD has a strong dividend growth track record, having increased its dividend by about 9% annualized over the last five years.

Fortis

Fortis Inc (TSX:FTS)(NYSE:FTS) is a utility stock that yields about 3.6% at today’s prices. That’s not the highest yield on earth, but it has a lot of potential to grow over time. Fortis has increased its dividend every year for the last 47 years. That’s one of the best dividend growth track records on the TSX. And it should continue into the future. FTS’ management is aiming for 6% annual dividend increases over the next six years, and it has made good on its promises of dividend increases in the past.

Why is Fortis such a reliable company?

Partially, it’s just a function of the utilities industry. Utilities are essential services. People don’t stop using heat and light in recessions. They might use them less, but they won’t cut them out entirely. This is in contrast to discretionary goods which take a real dip in recessions. In contrast to more discretionary services, Fortis enjoys high revenue stability. All utilities have this advantage. But Fortis is a more ambitious utility than most, having grown its business consistently over the decades through acquisitions.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Button owns The Toronto-Dominion Bank. The Motley Fool recommends FORTIS INC.

More on Dividend Stocks

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Is CNR Stock a Buy, Sell, or Hold for 2025?

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

These top dividend stocks both offer attractive yields and trade off their highs, making them two of the best to…

Read more »

Middle aged man drinks coffee
Dividend Stocks

Here’s the Average TFSA Balance at Age 35 in Canada

At age 35, it might not seem like you need to be thinking about your future cash flow. But ideally,…

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Invest Your $7,000 TFSA Contribution in 2024

Here's how I would prioritize a $7,000 TFSA contribution for growth and income.

Read more »

a man relaxes with his feet on a pile of books
Dividend Stocks

CPP Pensioners: Watch for These Important Updates

The CPP is an excellent tool for retirees, but be sure to stay on top of important updates like these.

Read more »

Technology
Dividend Stocks

TFSA Investors: 3 Dividend Stocks I’d Buy and Hold Forever

These TSX dividend stocks are likely to help TFSA investors earn steady and growing passive income for decades.

Read more »

four people hold happy emoji masks
Dividend Stocks

Love Dividend Growth? Check Out These 2 Income-Boosting Stocks

National Bank of Canada (TSX:NA) and another Canadian dividend-growth stock are looking like a bargain going into December 2024.

Read more »

An investor uses a tablet
Dividend Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock may seem like the best of the best in terms of dividends, but honestly this one is far…

Read more »