Home » Investing » Dividend Stocks » How to Build a Bulletproof Dividend Portfolio Starting With Just $10,000
Want to earn a growing stream of dividend income? Here’s how to invest $10,000 for a great combination of income and growth.
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Robin Brown
Robin Brown has been a Motley Fool contributor since January 2020. He has lived in Canada, Norway, and Australia where he studied theology and business management. Robin has worked as a commercial real estate manager, as well as an investment research advisor for a private investment manager. Today, he provides equity research and analysis for a private family office. He enjoys traveling, hiking, fishing, and spending time with his wife and daughters.
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You don’t need a massive amount of capital to start investing for dividend income. In fact, with as little as $10,000, you can build a diversified portfolio that can generate as much as $270 a year of passive income.
If you want to build a bulletproof dividend stock portfolio, here are four stocks to buy with $10,000. While these stocks don’t have high yields, they are growing their dividends substantially every year. They are great bets for capital and income upside.
CNR: An industrial dividend stalwart
If you have a long investing horizon and want a stock to hold for dividend growth, Canadian National Railway (TSX:CNR) is a great bet. CNR has been a very solid long-term investment. Its stock has returned 240% (including dividends reinvested) over the past decade.
CNR is a very resilient business. It operates a monopoly or duopoly in most of its markets. CN has persistent pricing power and the ability to grow earnings per share by at least a high single-digit rate for the foreseeable future.
CNR stock only yields 1.9%. However, its dividend has been growing at a strong, low-teens rate. Invest $2,500 in CNR, and you’ll earn $11.83 quarterly or $47.32 annually.
ENGH: A software stock with a tonne of cash
Another dividend-growth stock is Enghouse Systems (TSX:ENGH). This company owns and acquires communication and asset management software around the world.
The company provides both on-premises and cloud-based solutions, which provide choice to its customers. Its market segments tend to be low growth, but it makes that up with smart acquisitions.
It generates a lot of excess cash from its businesses. Enghouse has been generating more cash than it even knows how to deploy it. It paid a substantial $1.50-per-share special dividend in 2021.
Despite completing several acquisitions since 2021, Enghouse still sits with approximately $250 million of net cash. It only yields 2.5% today. Yet, it has grown its annual dividend by an 18% average annual rate over the past decade. $2,500 in Enghouse stock would yield $15.62 quarterly or $62.48 annually.
GSY: A growth and dividend story
goeasy (TSX:GSY) is another dividend stock that has also delivered substantial returns over the years. Its stock is up 319% in the past five years.
It provides higher risk but higher return loans to the non-prime consumer segment. The quality and quantity of its loans have been rising over the past several years. As a result, risk has been decreasing while earnings stability has been rising.
goeasy has grown its annual dividend by a 30% compounded annual rate over the past five years. Its payout ratio remains very conservative at about 30%. It yields 2.85% today. A $2,500 investment would earn $17.55 quarterly or $70.20 annually.
BAM: A leading asset manager globally
The final stock for a bulletproof dividend portfolio is Brookfield Asset Management (TSX:BAM). It manages $900 billion of assets and has nearly $500 billion of fee-bearing capital. It is a global leader in alternative investments (infrastructure, renewables, real estate, insurance, and private debt).
Brookfield continues to advance strong fundraising programs. Right now, it has over $100 billion of dry powder to be opportunistic in strategic acquisitions and investments.
Brookfield has a very clean balance sheet. It expects its dividend to grow at the same rate as its earnings growth. It just increased its annual dividend by 19%.
Right now, BAM stock yields 3.7%. Buy $2,500 worth of BAM stock, and you will earn $22.66 quarterly or $90.64 annually.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Canadian National Railway | $177.79 | 14 | $0.845 | $11.83 | Quarterly |
| Enghouse Systems | $35.12 | 71 | $0.22 | $15.62 | Quarterly |
| goeasy | $164.35 | 15 | $1.17 | $17.55 | Quarterly |
| Brookfield Asset Management | $55.63 | 44 | $0.515 | $22.66 | Quarterly |
