Can a $25,00 funding earn you $3,800 in annual passive revenue? Sure, offered you spend money on a inventory that grows its dividends or affords a dividend-reinvestment possibility (DRIP). A $3,800 annual dividend on $25,000 funding means a 15.2% yield. Shares that give such excessive yields are dangerous, with a excessive likelihood of a dividend reduce. Nonetheless, for those who keep invested in a dividend-growth inventory, you possibly can obtain a 15.2% yield that’s sustainable. Canadian Pure Sources (Tsx: cnq) has carried out it earlier than and is doing it now.
Canadian Pure Sources will help you develop annual passive revenue
Those that invested $25,000 in Canadian Pure Sources in July 2015 purchased 1,543 shares at round $16.2 a share. At the moment, the oil and fuel firm paid $0.46 annual dividend per share. Over time, the corporate elevated its manufacturing capability by including new oil sands reserves, thereby growing its money move. The corporate elevated its dividend to $2.5 in 2025, and people 1,543 shares are actually paying $3,626 in annual dividends.
Can the oil and fuel firm replicate its previous development within the subsequent 10 years?
In 2015, the U.S. shale fuel exploration disrupted the trade and lowered oil costs from US$100/barrel to US$65/barrel. Even in such a state of affairs, Canadian Pure Sources managed to develop its dividend by 2%. The corporate has oil sands reserves, that are cost-effective and require low upkeep in comparison with shale fuel. Its price benefit, low-maintenance reserves, robust stability sheet, and wealthy product combine helped the corporate develop its dividend at a median annual charge of 24% between 2017 and 2025.
It will possibly proceed to develop its dividend at a robust double-digit charge within the coming 10 years because it monetizes the $8 billion value of reserves it acquired in 2024. The corporate slowed its dividend development charge to 9.9% in 2025 as its internet debt grew to $18.7 billion. It’s channelling extra free money move (FCF) to cut back internet debt to $12 billion. As soon as it reaches the goal, it might divert 100% FCF to offer returns to shareholders.
Nonetheless, it’s higher to take a conservative dividend-growth charge estimate of 12%.
How can $25,000 in Canadian Pure Sources create $3,800 annual passive revenue?
The excessive dividend development of Canadian Pure Sources makes it a really perfect funding for a Tax-Free Financial savings Account (TFSA). The account’s tax-free withdrawals make sure you get the entire dividend with out paying dividend tax.
Canadians within the 30-34 age group have $59,110 of unused TFSA contribution room, as per knowledge from Statistics Canada. You may allocate $25,000 of this contribution room and purchase 582 CNQ shares. Your dividend might develop at a 12% compounded annual development charge.
| 12 months | CNQ Dividend at 12% CAGR | Annual Dividend Revenue on 582 CNQ shares |
| 2025 | $2.350 | $1,367.70 |
| 2026 | $2.632 | $1,531.82 |
| 2027 | $2.948 | $1,715.64 |
| 2028 | $3.302 | $1,921.52 |
| 2029 | $3.698 | $2,152.10 |
| 2030 | $4.142 | $2,410.35 |
| 2031 | $4.638 | $2,699.60 |
| 2032 | $5.195 | $3,023.55 |
| 2033 | $5.819 | $3,386.37 |
| 2034 | $6.517 | $3,792.74 |
Canadian Pure Sources doesn’t provide DRIP and buys again shares yearly, which helps it develop dividends at the next charge. Should you don’t need to look forward to 10 years, you possibly can speed up your passive-income portfolio by reinvesting your CNQ dividends in DRIP shares like Telus and Manulife Monetary.
These two shares will diversify your portfolio throughout sectors and assist you to compound returns. Suppose you make investments $1,367 in dividend revenue in Telus DRIP, you should buy 59 shares for $23 per share. Telus will use the $96.5 annual dividend and credit score 4 DRIP shares if the inventory worth hovers round $23. You may maintain accumulating extra income-generating shares from the passive revenue of CNQ dividends tax-free in a TFSA.