How to Create $1,818.25 in Passive Income in 2024

These stocks are looking strong after being undervalued for so long, especially after a recent announcement that could send shares up.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published February 1, 2024 4:20 pm EST

| More on: BLXINE

Passive income seekers continue to focus on dividend yields these days. But honestly, that’s probably one of the last things investors should consider. After all, the higher the dividend yield rises, the lower shares usually are.

But there are a few diamonds in the rough that offer a significant opportunity for today’s investor. Ones that offer these high dividend yields but also include a huge reason to invest for returns as well. So today, let’s get into one of these stocks that could help you achieve immense passive income this year.

Utility, wind power — Image source: Getty Images

Look to renewables

Renewable energy stocks have had a rough few years. Simply put, a whirlwind of activity caused these companies to see shares drop further and further. And now these losses have created a strong opportunity for investors to get back in for passive income.

These passive income stocks have fallen for a number of reasons. First, there was the fact they soared upwards in the first place. Renewable energy stocks were part of the boom in growth stocks when investors realized the future was going to be in renewable energy. Further considering European companies wanting out from Russian oil, and investment in renewables made sense.

And it still does! But stocks became overvalued, and that caused them to drop significantly again and again. First, they dropped with the markets, followed by the drop from higher interest rates causing cost cutting for the sector. So, what’s changed lately?

Bottoming out

These renewable energy stocks have now created a great opportunity for investors who want higher returns in the years to come. After all, higher interest rates won’t last forever. And we could soon see a flurry of activity of companies with strong balance sheets investing in these stocks once more.

In fact, it has already happened. Hydro-Québec announced last week that it would be investing in two Canadian companies, awarding them wind power projects. This will provide the companies with annual recurring revenue, and the companies should remain well-positioned during the process, according to analysts.

The projects were awarded to Boralex (TSX: BLX) and Innergex Renewable Energy (TSX: INE), and both are great investments. Boralex stock in fact could become a top grower in the space. However, I would argue Innergex stock is the better of the two.

Passive income top pick

Boralex stock is certainly still a strong option, but if you want to create a lot of passive income in 2024, then I would consider Innergex stock of the two. The stock currently offers an 8.15% dividend yield, with shares down a whopping 43% in the last year. And shares have remained down, until now.

Innergex stock has likely bottomed out, and therefore, this could be one of the best times to pick up the passive income stock. So here is what a $2,000 investment could bring in should we see shares return to 52-week highs, along with dividends.

COMPANY	RECENT PRICE	NUMBER OF SHARES	DIVIDEND	TOTAL PAYOUT	FREQUENCY	PORTFOLIO TOTAL
INE – now	$8.90	225	$0.72	$162	quarterly	$2,000
INE – highs	$16.25	225	$0.72	$162	quarterly	$3,656.25

And there you have it! With shares returning to normal you could achieve $162 in dividend income and $1,656.25 in returns. That’s total passive income of $1818.25 in 2024!