Want to make some extra income without too much fuss? Lots of Canadians do, especially when our loonie isn’t buying as much as it used to. A weaker Canadian dollar can make things pricier, so having a steady stream of dividend income can really help. Two dividend stocks on the TSX, Capital Power (TSX:CPX) and Dream Industrial Real Estate Investment Trust (TSX:DIR.UN), look like good options for investors wanting that reliable income. So let’s take a look.
Capital Power
Capital Power is a dividend stock that’s all about making electricity. It has different kinds of power plants across North America and is always looking to grow. In 2024, the dividend stock reported adjusted funds from operations (FFO) of $817 million and a net income of $701 million. It pays a dividend of $2.61 per share each year. That gives you a dividend yield of about 5.6% at writing. So, for every bit you invest, you get a decent percentage back each year.
Capital Power has a diverse mix of power generation, including natural gas, wind, and solar. This diversification can help provide stability to its earnings. The dividend stock is also actively involved in developing new renewable energy projects, which aligns with the global shift towards cleaner energy sources. Its management team has a track record of increasing dividends over time, signalling a commitment to returning value to shareholders. The regulatory environment for power generation in North America can impact Capital Power, but its established operations and long-term contracts help mitigate some of this risk.
Investors often view power producers as relatively stable investments due to the essential nature of electricity. Capital Power’s growth strategy includes both organic development and strategic acquisitions. The demand for electricity is expected to grow in the coming years, driven by factors like population increase and the electrification of various sectors. Capital Power is positioned to benefit from this increasing demand. Its focus on operational efficiency helps to maintain profitability and support dividend growth.
Dream Industrial
Dream Industrial REIT is in the business of owning and operating high-quality industrial properties. Think big warehouses and distribution centres in Canada and Europe. This real estate investment trust (REIT) pays an annual dividend of $0.70, while the dividend yield is at about 6.9%. That’s also a nice steady income stream for investors. It pays out every month, which is also handy.
Dream Industrial REIT’s portfolio of industrial properties is well-diversified by tenant and geography. The demand for industrial space has been strong, driven by e-commerce growth and the need for efficient supply chains. The REIT has a high occupancy rate, indicating strong demand for its properties. Its management team meanwhile actively manages the portfolio to maximize rental income and property value. Dream Industrial REIT also engages in selective acquisitions and developments to grow its asset base.
The industrial real estate sector is generally considered less volatile than other property types. The REIT’s focus on high-quality, well-located properties enhances its stability. Its financial position is sound, supporting its regular dividend payments. The lease terms for industrial properties are often longer, providing a predictable income stream. Dream Industrial REIT’s exposure to both Canadian and European markets offers geographic diversification. So, with two dividend stocks to consider, here’s how much you could earn.
Bottom line
Now, let’s say you decide to invest $20,000 and split it evenly between these two stocks. You’d put $10,000 into Capital Power and $10,000 into Dream Industrial REIT. Here’s roughly how much annual passive income you could expect.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
| CPX | $48 | 208 | $2.61 | $542.88 | quarterly | $10,000 |
| DIR.UN | $10.27 | 974 | $0.70 | $681.80 | monthly | $10,000 |
If you add those two amounts together, your total annual passive income would be approximately $1,224.68! That’s a nice little extra income just from owning these two investments! It can definitely help when the Canadian dollar isn’t as strong. This calculation doesn’t take into account any potential changes in the stock prices or dividend amounts. Reinvesting the dividends could lead to even greater returns over time due to compounding. It’s important to remember that dividend payments are not guaranteed and can be changed by the companies. However, both Capital Power and Dream Industrial REIT have a history of consistent dividend payouts.