How to Easily Turn $10,000 Into $592 in Annual Passive Income

GICs and TSX dividend stocks including TELUS could combine to create a formidable passive income stream.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Legendary investor Warren Buffett describes Berkshire Hathaway’s investment portfolio as a “smorgasbord of businesses.” The portfolio has generated immense capital growth, and fed itself with huge annual cash flows for decades, enabling his partner Charlie Munger and him to fund new acquisitions and compound the returns. Ordinary individuals may not have the sizeable capital to execute transactions at Mr. Buffett’s levels, but a small $10,000 capital investment in TSX dividend stocks may generate more than $592 in annual passive income, and grow into a sizeable portfolio over time.

Diversification across assets and asset types is key to reducing investment risks. You may wish to add fixed-come investments to the menu as you build your own smorgasbord of businesses.

I’d deploy $10,000 in new capital to easily generate nearly $600 in annual passive income buying fixed income securities and dividend growth stocks.

Buy GICs

Fixed-income investments significantly reduce the total investment risk in your portfolio. They basically include bonds, t-bills, guaranteed investment certificates (GICs), and high-interest savings accounts (HISAs). Fixed income holdings may provide a floor for your portfolio. I’d conveniently ignore an outlier year 2022 when bond portfolios suffered similar losses and experienced volatility spikes similar to stock portfolios. The past year was just an abnormal year that may never recur during many investors’ future investment horizons.

To maintain a low-risk passive income portfolio, I would allocate, say, 40% to fixed-income assets and invest in two-year GICs that currently yield 5.6%. The $4,000 investment could pay out $$224 in annual passive income.

Target capital allocations may vary given individual risk tolerances and personal investment objectives. However, it is healthy to maintain some portfolio exposure to low-risk fixed-income assets. Individual investors need more fixed income exposure as they get older, and as investment horizons get shorter and time is more limited to recover from periodic and random stock portfolio losses.

Scoop up TELUS stock

Created with Highcharts 11.4.3TELUS PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

The Canadian telecoms giant TELUS (TSX:T) fits into an income-oriented dividend growth portfolio well. TELUS is a cash-flow-generating machine that’s still growing its revenue base and keeps increasing its dividends every year. Its most recent quarterly dividend of $0.3636 per share is 7.4% higher than it was a year ago yielding over 6.2% annually. A $5,000 investment in TELUS stock could generate $310 in passive income every year.

I’d buy TELUS stock confidently given its latest strong financial performance, which may support sustainable dividend growth rates in the future.

The company reported 13% revenue growth and 36% growth in free cash flow, while increasing operating earnings year over year during the second quarter of 2023. TELUS’s thrust into digital customer experiences through TELUS International, its health services business, and agricultural and consumer goods data-driven offerings are growth drivers that may unlock positive returns for shareholders.

The $33.8 billion mature company is still capable of engineering double-digit growth rates and remains committed to raising its dividends every year, a tradition it has maintained for seven consecutive years now.

Grow With Decisive Dividend

Created with Highcharts 11.4.3Decisive Dividend PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Decisive Dividend Corp. (TSXV:DE) is a tiny $150 million nanocap monthly dividend stock that’s wildly outperforming the TSX. The tiny stock has soared by 66.7% so far this year and delivered a decisive 72.2% in total investment returns since January. Interestingly, Decisive Dividend’s monthly dividend could still yield 5.8% for new investors who buy the fast-growing industrial stock today.

The company is growing through actively acquiring targeted peers, and decisively growing its revenue, earnings, and cash flow base in the process. Revenue grew by 47% and gross earnings increased by 62% year over year during the first half of 2023. Adjusted earnings before interest, taxes, depreciation, and amortization expenses (adjusted EBITDA) soared 80%, and net income during the first half of this year was 127% higher than it was during a comparable period last year.

Most noteworthy, free cash floor per share growth of 45% year over year should support Decisive Dividend’s generous monthly dividend.

A $1,000 investment in Decisive Dividend stock could generate a $57.60 stream of annual passive income, and potentially grow in value as the company executes a successful growth strategy.

How to turn $10,000 into a $592 annual income stream

Our portfolio additions above can be summarized in the table below.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDEND/InterestTOTAL PERIODIC PAYOUTFREQUENCYTOTAL ANNUAL PAYOUT
TELUS Corp. (TSX:T)$23.35 214$0.364 $77.90Quarterly$310.00
Decisive Dividend
(TSXV:DE)
$8.31 120$0.04 $4.8Monthly$57.60
2Yr GIC$4,000 $224.00 Annually$224.00
TOTAL ANNUAL INCOME     $591.60

Should you invest $1,000 in Telus right now?

Before you buy stock in Telus, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Telus wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Brian Paradza has no position in any of the stocks mentioned. The Motley Fool recommends Berkshire Hathaway and TELUS. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Super sized rock trucks take a load of platinum rich rock into the crusher.
Dividend Stocks

Invest $25,000 in This Dividend Stock for $536.90 in Annual Passive Income

This dividend stock is one of the best options for those looking to create income long term.

Read more »

A worker overlooks an oil refinery plant.
Dividend Stocks

Where I’d Put $10,000 in Top Canadian Energy Stocks This April for Dividend Income

These three energy stocks are ideal for income-seeking investors, given their solid cash flows and consistent dividend growth.

Read more »

An investor uses a tablet
Dividend Stocks

This Could Be the Top Canadian Dividend Stock to Buy Right Now

Here's why I think Enbridge (TSX:ENB) remains a top option for dividend investors in this current macroeconomic climate.

Read more »

senior man smiles next to a light-filled window
Dividend Stocks

How I’d Invest My $7,000 TFSA Across These 3 Canadian Stocks for Dividend Income

Investors looking for Canadian stocks for dividend income that can last decades should consider buying these three stocks today.

Read more »

A worker uses a double monitor computer screen in an office.
Dividend Stocks

National Bank vs. Bank of Montreal: How I’d Divide $12,000 Between Banking Stocks

Here's how I would think about splitting up a $12,000 prospective investment in National Bank of Canada (TSX:NA) and Bank…

Read more »

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Dividend Stocks

Canadian National Railway: How I’d Approach This Blue-Chip With $10,000 in 2025

Despite current macro headwinds, Canadian National Railway remains a rock solid, blue-chip pick for long-term investing.

Read more »

rain rolls off a protective umbrella in a rainstorm
Dividend Stocks

April Income Strategy: Where to Invest $10,000 in Big Dividend Stocks

These stocks offer attractive yields for income investors.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

How I’d Invest $50,000 in TFSA Cash for 2025

Looking to get started with a TFSA? Here's exactly how to get going with these top stocks.

Read more »