Canadian investors love their dividend stocks. And it’s clear why. You receive passive income, in some cases, almost immediately from the purchase of these companies. Yet, in this case, many investors can overlook another important passive-income factor — and that’s returns.
Today, we’re going to look at a dividend stock that simply gushes with passive income. Whether it’s the company’s dividend or its higher-than-average returns, it’s the perfect purchase on the TSX today.
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How to beat the TSX
First off, what should investors consider if they want to beat the TSX today? Beating the performance of the TSX typically refers to achieving higher returns on an investment portfolio compared to the performance of the Toronto Stock Exchange (TSX) Composite Index.
The TSX Composite Index is a benchmark index that tracks the performance of the stock prices of the largest companies listed on the Toronto Stock Exchange. It’s often used as a reference point for Canadian equity performance.
So, if someone or a fund manager “beats the performance of the TSX,” it means they have generated returns that exceed the overall performance of the market as represented by the index. This could be achieved through various strategies, such as selecting individual stocks that outperform the index, timing the market effectively, or utilizing other investment instruments alongside equities. However, add in dividends and you could beat the TSX performance immediately. So, given that the returns have been 20% from 52-week lows, it’s not going to be easy.
A dividend stock to consider
Now, investors will need to find a dividend stock offering a strong yield, as well as returns that have been over 20% in the last year. And honestly, there’s a perfect one out there that’s performing even better.
Investors will likely want to consider Brookfield Renewable Partners (TSX: BEP.UN). Shares of the company have surged upwards by over 37% since 52-week lows. This comes from the company’s strong earnings results, with the promise of more growth in the future.
Not only did the company announce strong cash flow, but also announced a new deal with Microsoft. The deal would add 10.5 gigawatts of additional renewable energy to its portfolio. The partnership now makes it a key player in the renewable energy transition among large tech companies.
On top of this, the company expects to add another 7,000 megawatts of renewable capacity this year alone. So, there is still more growth and expansion to come.
Bottom line
While achieving all this, BEP stock still holds a dividend yield of 5.32% as of writing. All while trading at just 1.7 times book value, putting it in value territory. So, with shares up 37% but still down 14% in the last year, it’s a perfect time to consider the renewable stock — especially when you get TSX-beating performance with a dividend yield that will keep the cash flowing for years or even decades to come.
