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Stock market investing with a calculated approach can help you achieve a wide range of financial goals, whether you want to build a retirement nest egg or a passive income stream. Dividend investment is a great way to make money while you sleep, provided you can identify the right income-generating assets for the purpose.
Volatility has been a concern for the stock market due to the pandemic since the start of 2020. The S&P/TSX Composite Index last year’s strong performance, despite the pandemic, showed that growth is still possible.
At the time of writing, the Canadian benchmark is up 2.37% year-to-date. However, rising interest rates and an inflationary market environment could lead to greater equity market volatility in the coming months. Investing in creating a passive income stream could be a great way to continue generating returns on your investments and counter the impact of the rising cost of living.
Today I will discuss two dividend stocks this could be excellent as a base holding for a passive income portfolio.
Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) is a regulated utility and renewable energy conglomerate with a market capitalization of $11.82 billion. Utility companies are some of the most reliable stocks if you’re looking for passive income machines you can rely on. The company’s revenue streams generate fairly predictable cash flows, mitigating the impact of volatility on its performance.
Algonquin’s renewable energy segment sets it apart from other utility companies because of the segment’s long-term growth potential. At the time of writing, Algonquin Power shares trade at $17.55 per share and offer a hefty dividend yield of 4.95%. Investing in its stocks now could help you secure the high dividend yield and earn larger long-term returns through capital gains in the future.
The Big Six Canadian Banks are among the most reliable stocks to consider if you are looking for stable income and long-term growth. Toronto-Dominion Bank (TSX: TD) (NYSE: TD) is among the Big Six and has a market capitalization of $190.26 billion. The bank enjoys considerable revenue through its cross-border operations in the United States and strong domestic operations.
With its growing presence in the United States, TD Bank investors can diversify outside of the Canadian economy to take advantage of potentially higher returns in the years to come. TD Bank shares are trading at $104.15 per share at the time of writing, and they offer a dividend yield of 3.42% that you could lock into your portfolio today.
Dividend investing is a great strategy for earning more income that can supplement your active income when you need extra support to fund your expenses in inflationary environments.
If you reach the point where you no longer need to supplement your active income with a passive income stream, you can reinvest the shareholder dividends you earn to unlock the power of compounding and accelerate your wealth growth.
Algonquin Power & Utilities stocks and TD Bank stocks could be ideal additions to your portfolio for this purpose.