How to Invest $5,000 for Safe Passive Income in 2024

A red umbrella stands higher than a crowd of black umbrellas.

With inflation soaring so much, many Canadians are looking for ways to earn some extra passive income. Investing in stocks is an attractive option for a few reasons.

Stocks are an attractive place to invest and earn passive income

First, you can invest as much or as little as you like. Secondly, stocks only require a small fee to buy and sell. Thirdly, stocks are liquid. If you want to buy and sell, you can do so easily and quickly.

You don’t need a lot of cash to get started. Even just $5,000 can be a great start. In fact, if you are able to defer using the passive income you generate, you can grow that capital by re-investing your dividends.

If you can, take your dividends and re-invest to compound your wealth

If you earned an approximate 4.5% dividend yield and you re-invested your income at a similar yield, your $5,000 could rise by over 50% (to $7,765) in 10 years. That doesn’t factor any capital appreciation into your stocks, either. The key is to start investing quickly, pick good quality businesses, and then re-invest your earnings.

Here are a few stocks you could consider for earning safe passive income in 2024.

A steady, stable, long-term dividend stock

Fortis (TSX:FTS) is one of Canada’s most conservative dividend stocks. If you want a stock for the decades, this might be one. It already has a 50-year record of consecutively increasing its dividend annually.

If you want a low-risk stock with modest growth, Fortis is a good stock. It owns a portfolio of 10 utilities across North America. 99% of its income is regulated, so its results tend to be predictable.

It has a capital plan to spend around $5 billion a year. It expects this could help grow its rate base by an average of 6%. In turn, it hopes to increase its dividend by 4-6% annually going forward.

Fortis stock yields 4.33% today. $5,000 invested in Fortis stock would yield $53.69 of quarterly passive income, or $214.76 annually.

A real estate stock for monthly passive income

Another stock for safe passive income is Granite Real Estate Investment Trust (TSX:GRT.UN). This is an excellent investment if you want real estate exposure but can’t afford an investment property.

In fact, a real estate investment trust (REIT) is an attractive real estate alternative because you get to own the best-quality assets and earn income but have no management responsibility.

Granite operates a large institutional-grade industrial portfolio across Canada, the U.S., and Europe. Industrial has been one of the most resilient asset classes over the past few years.

Granite has a slate of investment-grade tenants, long plus-six-year lease terms, a stellar balance sheet, and a very conservative management team. This REIT has a 13-year history of annually increasing its dividend. It also happens to trade at a discount to its private market value, which means there could be long-term upside in its stock.

This passive-income stock yields 4.4% today. A $5,000 investment in Granite would earn an $18.15 monthly dividend (annualized, which is $217.80 of passive income).

Should You Invest $1,000 In Fortis?

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* Returns as of 12/22/23

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Fool contributor Robin Brown has positions in Granite Real Estate Investment Trust. The Motley Fool recommends Fortis and Granite Real Estate Investment Trust. The Motley Fool has a disclosure policy.