Establishing a passive-income stream takes a significant investment in both dollars and time. However, for investors with just $10,000 in savings, there is hope. Investing early on and reinvesting dividends can be powerful tools in attaining any passive-income goal.
So, what stocks should you start investing in to generate some passive income?
Start with a great passive-income stock
Finding the right mix of stocks can make the difference between working until your golden years or retiring a few years early.
That’s precisely why RioCan Real Estate (TSX:REI.UN) is a great option to start with.
RioCan is one of the largest real estate investment trusts (REITs) in Canada. The REIT invests in a growing number of mixed-use residential and commercial properties. Those properties generate a recurring and stable revenue stream that results in a monthly distribution, that is akin to a landlord collecting rent.
The current mix of a still white-hot real estate market and surging interest rates has created a perfect storm for investors looking for passive income.
In short, investors with $10,000 to invest in RioCan can purchase enough shares to generate just over $50 per month in distributions. That’s not enough to retire on, but it is enough to purchase a few extra shares each month through reinvestments.
Again, this is a long-term play, and buying RioCan can help grow your passive-income portfolio completely on autopilot.
Throw in some monthly defensive appeal
Exchange Income Corporation (TSX:EIF) is another great passive-income stock to consider. Winnipeg-based Exchange owns over a dozen subsidiary companies that are broadly grouped into aviation and manufacturing segments.
Across both groups, those subsidiaries share two common themes. First, they all generate cash for Exchange. Part of the reason for that is the second point: all of those subsidiaries provide a unique and necessary service for which there is limited or no competition.
By way of example, on the aviation side, Exchange has subsidiaries that include a flight training school and airlines providing cargo and passenger service to Canada’s remote north.
On the manufacturing side, the company has subsidiaries providing unique services such as window-wall systems for buildings and cell tower fabrication services.
That unique niche allows Exchange to invest in growth and pay out a very handsome monthly dividend. As of the time of writing, the yield is an appetizing 5.45%.
Like RioCan, investors looking at Exchange should view the investment as a long-term holding that will continue to grow through reinvestments. It’s also worth noting that Exchange has provided 17 annual or better dividend hikes in the past 19 years.
This stock is a must-have for any portfolio
One final option for investors to consider buying right now is Enbridge (TSX:ENB). Apart from the passive-income potential that comes from the insane 7.31% yield, Enbridge boasts a well-diversified and defensive portfolio.
For those unfamiliar with the stock, Enbridge operates the largest and most complex pipeline system on the planet. That network includes both natural gas and crude elements, which collectively make up the bulk of Enbridge’s revenue stream.
That pipeline network is also defensive thanks to the sheer volumes transported. Speaking of defensive appeal, Enbridge also operates North America’s largest natural gas utility.
And that’s not all. Enbridge also operates a growing renewable energy unit with facilities across North America and Europe.
Collectively, these units provide a growing and defensive revenue stream for the company that allows it to invest in additional growth initiatives and payout that handsome dividend.
In short, Enbridge is a must-have for any long-term diversified portfolio.
Ready to generate passive income with just $10,000?
No stock, even the most defensive, is without some risk. Fortunately, all three of the stocks mentioned above provide some defensive appeal.
They also boast significant income-earning potential, which can handily break that $2,000 passive income ceiling within a few months of reinvestments.
| Company | Recent Price | No. of shares | Dividend | Total Payout | Frequency |
| RioCan Real Estate | $17.56 | 569 | $1.11 | $631.59 | Monthly |
| Exchange Income Corporation | $48.41 | 206 | $2.64 | $543.84 | Monthly |
| Enbridge | $50.04 | 199 | $3.66 | $728.34 | Quarterly |
In my opinion, one or all of the above stocks should be core holdings in any well-diversified, long-term portfolio.
