An extra $1,000 in income each year can help you pay bills and save money, especially today with inflation at levels not seen in decades. One way to increase your income is by investing in dividend stocks. And with many high yields to consider, you don’t need a fortune to generate that much passive income.

Investing around $20,000 can be enough to do the trick. If you put that money into stocks Gilead Sciences (NUTS -0.05%) AND Enbridge (ENB 0.61%)that would be enough to earn you just over $1,100 a year — and that amount is likely to grow over time.

1. Gilead Sciences: $8,000

Healthcare company Gilead Sciences is a sustainable investment, focused on developing medicine and treatment options for HIV. And it also has a fast-growing oncology business with sales in that segment rising 71% year over year to $527 million last quarter (ended June 30).

That’s still a relatively small part of its business, however, as Gilead reported $6.3 billion in revenue during the period.

These are the kinds of treatments that patients can’t give up, and that makes Gilead a promising buy. In addition to its growing oncology business, the company has an exciting opportunity in lenacapavir, an HIV treatment that would only require patients to have an injection once every six months (as opposed to daily pills).

A decision from the Food and Drug Administration on the treatment could be made before the end of the year. Analysts project lenacapavir could generate as much as $4 billion in revenue at its peak.

The growth potential Gilead has in both oncology and HIV makes the business look solid over the long term and should make its dividend more secure than it already is. While its payout ratio of over 80% may seem high, the company’s free cash flow over the past 12 months came in at $9.4 billion, more than double the $3.7 billion it paid out in dividends during that time.

With a dividend yield of 4.5%, which is triple i S&P 500 at an average of 1.5%, an $8,000 position in stocks would generate $360 in passive income over a year.

2. Enbridge: $12,000

I would share most of a $20,000 investment in the oil and gas company Enbridge. Its dividend yield of 6.2% would make the most of your money and with an investment of $12,000, you can earn around $744 in dividends every year. When you combine that with the dividend from Gilead, you’re just over $1,100 in passive income.

Another reason to pile more money into the stock is that Enbridge has paid a dividend for 67 years and has also raised its payout for 27 consecutive years, for a compound annual growth rate of 10% during that time. By comparison, Gilead has only paid dividends since 2015, though it too has increased its payout.

Enbridge’s operations remain sound. The company announced in July that it had secured C$3.6 billion ($2.8 billion) worth of new projects, bringing the total value of new growth projects added in 2022 to CA$4.5 billion. During its most recent quarter, ending June 30, Enbridge reported distributed cash flow (DCF) of CA$2.7 billion — up about 10% year over year. DCF is what the company uses to value its dividend. It is a common measure in oil and gas that adjusts operating cash flow for items such as interest expense, preferred dividends, and maintenance capital expenditures.

A growing DCF number suggests that Enbridge is on a positive path and its dividend is in good shape. The company aims for its dividend to be no more than 70% of DCF. Based on its DCF guidance of at least CA$5.20 per share this year, the company is within that range with a payout ratio of 66%.

David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Enbridge and Gilead Sciences. The Motley Fool has a disclosure policy.

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