Buy these 2 TSX shares for a shot at $6,000 in annual passive income

Canadian investors can benefit from juicy passive income from high-yielding dividend stocks. Income from these eligible dividends will be taxed at a lower rate than your ordinary income if the Shares are held in your unregistered account.

With stock markets down about 6.5% over the past few weeks, you can now look to these blue-chip stocks for higher dividend yields.

Bank of Nova Scotia

North American bank stocks have been hurt by the collapse of three US regional banks this year, with the most notable and largest (so far) being Silicon Valley Bank. Collectively, they had about $331 billion in combined assets at the time of the failure. There are fears that this could trigger a domino effect in the North American and even the global financial system. That is the worst case scenario. The fact is, regulators quickly stepped in to seize Silicon Valley Bank’s assets, which totaled around $209 billion at the time of the collapse.

Bank of Nova Scotia (TSX:BNS) in particular tends to offer the highest dividend yield among its major Canadian bank peers. The international bank has been paying dividends every year since 1833. Its payout ratio is estimated at about 54% of earnings this year, as the bank expects earnings to fall by about 10%.

In a higher interest rate and potentially recessionary environment, regulators could step in to prevent the big Canadian bank stocks from increasing their dividends and buying back their shares.

At $64.83 per share at the time of writing, BNS stock offers a whopping 6.4% yield. Earnings and the payout ratio have the buffer to protect the dividend, although the payout ratio is likely to be slightly higher than usual this year.

TC energy

TC energy (TSX:TRP) stock has been trading at the bottom of its range since the pandemic. Several factors play a role in the weighting of the stock. First, higher interest rates have made fixed income vehicles better competitors (relative to dividend stocks) as income investments. Second, the company had significant cost overruns on its Coastal GasLink project, made worse by higher inflation.

However, the dividend stock chugged along, continuing its dividend growth streak over the past month. It increased its dividend by 3.3%. The stock’s 31% sell-off since its 2022 all-time high makes it a value stock for passive income. At $51.31 per share at the time of writing, TC Energy is yielding nearly 7.3%.

How to Make $6,000 in Passive Income a Year

Investors may consider parking some of their long-term capital in high-yielding blue-chip stocks like BNS and TRP for passive income. If central banks cut interest rates in North America, it could boost the economy and likely trigger a rally in these undervalued stocks.

To generate $6,000 in passive income per year from each share, buy the appropriate number of shares listed in the table below. If you want to earn $3,000 in passive income every year, divide the number of shares by two.

BNS $64.83 1,456 $1.03 $6,000 4
TRP $51.31 6,452 $0.93 $6,000 4

Investors would be happy to hear that these two stocks are more likely to increase their dividends over time, meaning more passive income for them!


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