If you have $10,000 to deploy in dividend stocks with the goal of generating meaningful passive income, it’s possible to structure a portfolio that delivers roughly $700 in annual payouts without resorting to exotic or ultra-risky assets. The key is combining stocks with high yields and business models that support sustainable dividends.

A straightforward approach is to split your $10,000 evenly between two high-yield Canadian energy stocks. These businesses operate in areas where cash flows are relatively stable and predictable, which supports generous distributions to shareholders.

First Pick: Energy Infrastructure Player

The first pillar of this strategy is an energy infrastructure company that owns and operates major pipeline systems and storage facilities. These assets generate revenue through long-term contracts, many of which guarantee payment regardless of commodity price fluctuations. By focusing on fee-based revenue rather than direct commodity exposure, this company delivers a dividend yield north of 6%. With half of your $10,000, this position is expected to generate a quarterly dividend stream that contributes roughly $340 in annual income. Its payout history includes multiple consecutive raises, and free cash flow coverage indicates the dividend is supported by real underlying earnings.

Also Read: Long term investing in Canada

Second Pick: Energy Royalty Business

The second leg is a royalty-style energy company that owns mineral rights across oil and gas producing regions in North America. Its business model is simple: it collects royalties from producing partners without incurring significant capital or operating costs. That allows it to maintain one of the sector’s higher yields, currently over 7%, paid monthly to investors. Allocating your remaining $5,000 here adds approximately $357 in annual dividend income. The payout is tied to production and pricing conditions but remains well-supported when commodity prices stay above investment-economics thresholds.

Also Read: Dividend paying stocks Canada

Portfolio Outcome and Considerations

By splitting $10,000 equally between these two stocks, the combined dividend income is projected to total about $698 in a year. That’s equivalent to a blended yield near 7% on your entire investment. Over time, reinvesting these dividends and capturing any increases in payout rates can compound your passive income further.

This strategy isn’t without risk: both companies are tied to the energy sector, which can be cyclical, and dividend yields that are high relative to the market may compress if fundamentals deteriorate. Ensure you understand the business drivers and be comfortable with sector concentration before committing your capital.