Passive Income: What $20,000 Could Generate in Safe Dividends

The article explains focusing on dividend safety — credit ratings, payout ratios, cash-flow stability, and dividend history — and uses Fortis and Brookfield Infrastructure Partners as examples; it estimates splitting $20,000 between the two could produce about $850 in annual income.

The article outlines how a $20,000 portfolio could be used to generate passive income through dividend-paying companies. It emphasizes that dividend "safety" depends on several factors beyond a high yield. The piece highlights credit ratings, payout ratios, cash-flow or earnings stability, and long dividend or distribution track records as key considerations. It also stresses that valuation matters for protecting capital and managing downside risk. Key details: - The article lists four primary measures of dividend safety: credit rating, payout ratio, earnings or cash-flow stability, and dividend history. - It gives a simple yield example: a 4% yield would generate $800 per year from a $20,000 holding. - The article mentions Fortis and reports 52 consecutive years of dividend increases, a 10-year dividend growth rate of 5.9%, management guidance of 4–6% annual dividend growth through 2030, an S&P credit rating of A-, and a payout ratio near 72%; the article quotes a share price of $71.74 and notes a preferred accumulation level closer to $66 for extra margin of safety. - The article mentions Brookfield Infrastructure Partners and reports 18 consecutive years of distribution growth, a 10-year distribution growth rate of 7.3%, a target payout ratio of 60–70%, an S&P credit rating of BBB+, and a reported price near $47 with an approximate 5% yield and about a 14% discount to analyst consensus. - The article presents an example allocation that splits $20,000 equally between the two names and estimates that would produce about $850 in annual passive income, with potential income growth of about 5% per year. Summary: Focusing on dividend safety highlights stability and capital protection through measures such as creditworthiness, payout levels, cash-flow stability, dividend history, and valuation; the article illustrates that approach using Fortis and Brookfield Infrastructure Partners and an estimated $20,000 allocation. Undetermined at this time.