If you’re looking for passive income to come in each month, that’s great! However, there is a lot more to consider than just some cash flow when picking a stock. Investors should find a dividend stock that has a lot more room to grow. That is why today, I’m going to recommend investors take a look at Northland Power (TSX:NPI).
Why Northland?
Northland stock is a solid choice if you’re looking for growth in the next few decades. The company holds renewable energy assets in various locations around the world, creating a diverse range of options for investors to look at.
One of the most exciting is offshore wind farming, which doesn’t take up arable land and produces higher wind speeds. Therefore, it creates more power than those wind farms located on land.
Furthermore, Northland stock is one of the few renewable energy companies that’s been around for decades. So, rather than choosing some up and coming dividend stock in this field, you can look back on solid growth.
In fact, over the last decade along, Northland stock is up 85% as of writing. That’s a compound annual growth rate (CAGR) of 6.14%! That’s solid growth from a solid stock.
How much in dividends are we talking?
Now that you know this is a solid stock from the past, what about the dividends? Northland stock currently holds a dividend yield 3.5% as of writing. In the last decade, that dividend has grown by a CAGR of just 1.06%. However, that’s because it’s been using available cash to expand, so I’m quite happy with that.
Plus, it’s in value territory with the dividend stock currently trading at just 9.97 times earnings as of writing. Now, if you’re going to bring in significant passive income from this dividend stock, there are two ways about it: investing now and drip feeding. Let’s look at the former first.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND (ANNUAL) | TOTAL PAYOUT (ANNUAL) | FREQUENCY | TOTAL PORTFOLIO |
| NPI | $34.50 | 3,330 | $1.20 | $3,996 | Monthly | $114,885 |
As you can see, reaching that amount is possible. But it’s a huge investment. So, instead, let’s look at what would happen if we drip feed into this stock over a decade.
| Year | Shares Owned | Annual Dividend Per Share | Annual Dividend | After DRIP Value | Year End Shares Owned | Year End Stock Price | New Balance |
|---|---|---|---|---|---|---|---|
| 1 | 2275.00 | C$1.20 | C$2,730.00 | C$81,262.85 | 2350.79 | C$36.62 | C$86,081.99 |
| 2 | 2350.79 | C$1.21 | C$2,852.28 | C$88,977.98 | 2425.30 | C$38.87 | C$94,263.42 |
| 3 | 2425.30 | C$1.23 | C$2,973.88 | C$97,280.67 | 2498.44 | C$41.25 | C$103,068.45 |
| 4 | 2498.44 | C$1.24 | C$3,096.03 | C$106,207.46 | 2570.13 | C$43.79 | C$112,535.86 |
| 5 | 2570.13 | C$1.25 | C$3,218.63 | C$115,797.02 | 2640.30 | C$46.47 | C$122,706.73 |
| 6 | 2640.30 | C$1.27 | C$3,341.56 | C$126,090.31 | 2708.90 | C$49.33 | C$133,624.50 |
| 7 | 2708.90 | C$1.28 | C$3,464.71 | C$137,130.68 | 2775.86 | C$52.36 | C$145,335.22 |
| 8 | 2775.86 | C$1.29 | C$3,587.99 | C$148,964.09 | 2841.17 | C$55.57 | C$157,887.68 |
| 9 | 2841.17 | C$1.31 | C$3,711.33 | C$161,639.25 | 2904.77 | C$58.98 | C$171,333.55 |
| 10 | 2904.77 | C$1.32 | C$3,834.63 | C$175,207.77 | 2966.65 | C$62.61 | C$185,727.65 |
As you can see, if you bought 2,275 shares of this dividend stock, down the road, you would bring in the $3,996 needed to create $333 per month in passive income. What’s more, it would cost just $78,487.50 instead of $114,885. That’s still a lot, but you also end up with a portfolio worth $185,727.65 at the end of it!
So, it’s up to you and your budget, but this is still a solid dividend stock I would choose for further investment in the next decade and beyond.
