Investing in blue-chip dividend stocks that offer a high dividend yield can help you generate a recurring stream of passive income at a low cost. Generally, blue-chip stocks are part of mature industries and enjoy steady cash flows across market cycles.
This allows companies to grow their earnings base over time and raise dividends each year, which enhances the dividend yield. Further, dividend growth stocks also have the potential to deliver returns via long-term capital gains.
Let’s see how these three TSX stocks can help you earn $2,000 in annual passive income with less than $32,000 in savings.
Enbridge stock
An energy infrastructure behemoth, Enbridge (TSX:ENB) is among the most popular dividend stocks in Canada. Priced at 16 times forward earnings, ENB stock offers you a tasty dividend yield of 7.9%.
The company continues to widen its base of cash-generating assets via organic investments and accretive acquisitions, allowing it to grow cash flow and dividends. In the last 29 years, Enbridge has raised dividends by more than 9.5% annually, showcasing the resiliency of its cash flows.
Around 80% of Enbridge’s earnings before interest, taxes, depreciation, and amortization (EBITDA) is tied to long-term, inflation-linked contracts, making the TSX giant relatively immune to fluctuations in commodity prices.
Enbridge’s wide economic moat, growing earnings base, and reasonable valuation make it a top dividend stock to own in 2024.
Telus stock
A telecom leader, Telus (TSX:T) is part of a recession-resistant sector. While the telecom sector is slow-moving, Telus grew mobile and fixed customer growth by 103,000 in the fourth quarter (Q4) of 2023 on the back of its robust portfolio of bundled products and services.
Its strong mobile phone net additions stood at 126,000, the company’s best Q4 since 2011, allowing Telus to surpass the 10 million mobile phone subscriber milestone.
Telus increased operating revenue by 2.6% in Q4, while adjusted EBITDA improved by 9.4% compared to the year-ago period.
Priced at 21.9 times forward earnings, Telus stock is reasonably valued and trades at a discount of 12% to consensus price target estimates. It also pays shareholders an annual dividend of $1.50 per share, indicating a yield of 6.4%.
Bank of Montreal stock
The final high dividend stock on my list is Bank of Montreal (TSX:BMO), which currently yields 4.8%. While the banking industry is cyclical, BMO has raised dividends by 7.6% since 2004, which is exceptional.
Priced at 10 times forward earnings, BMO stock is very cheap and trades at a discount of 10% to consensus price target estimates.
The Canadian banking sector is highly regulated, allowing BMO and its peers to enjoy an entrenched position and leading market share in the country. A conservative approach toward lending enables BMO to maintain a healthy balance sheet and pay dividends even during periods of economic turmoil.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Enbridge | $46.03 | 230 | $0.915 | $210.5 | Quarterly |
| Telus | $23.64 | 448 | $0.375 | $168 | Quarterly |
| Bank of Montreal | $124.66 | 85 | $1.51 | $128.35 | Quarterly |
The Foolish takeaway
Investing a total of $31,750 distributed equally in these three TSX dividend stocks will help you earn $2,000 in annual passive income. Moreover, if the companies grow their dividends by 7% annually, your payout will double in the next 10 years.
