Create a Pension Passive-Income Stream With This TSX Stock

Brookfield Renewable is a cheap dividend stock that can help you generate a passive stream of income in the upcoming decade.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The average CPP (Canada Pension Plan) payment for a 65-year-old Canadian beginning these payouts is $831.92, while the maximum payment is $1,364.60 in 2024. So, we can see that Canadians need to supplement their pension plans with other passive-income streams.

You can create a passive-income stream at a low cost by investing in Guaranteed Investment Certificates (GICs) or dividend stocks. While the Bank of Canada has lowered its interest rates by 25 basis points, several banks still offer a 5% yield on products such as GICs.

GICs allow you to deposit a certain amount with a bank or a financial institution and earn interest on the amount. In addition to regular interest payments the bank will pay you the principal amount on maturity. Similar to other fixed-income products, GICs are ideal for investors with a low-risk appetite. Moreover, a 5% yield will help you generate wealth, given inflation in 2024 has cooled off to less than 3%.

Alternatively, investors with a higher risk appetite can consider investing in undervalued dividend-growth stocks that offer a tasty yield. In addition to steady dividend income, investors are positioned to benefit from long-term capital gains.

One such TSX dividend stock is Brookfield Renewable Partners (TSX:BEP.UN), which trades 44% below all-time highs and offers shareholders a dividend yield of 5.5%, which is higher than most GICs.

Created with Highcharts 11.4.3Brookfield Renewable Partners PriceZoom1M3M6MYTD1Y5Y10YALL13 Jun 201413 Jun 2024Zoom ▾201520162017201820192020202120222023202420162016201820182020202020222022202420240www.fool.ca

Brookfield Renewable is part of the AI megatrend

Brookfield Renewable is a diversified clean energy company valued at $23 billion by market cap. It expects accelerating global trends such as cloud computing, digitalization, and the adoption of AI (artificial intelligence) to drive power demand higher in the upcoming decade. In fact, Brookfield Renewable is a key enabler of this significant growth trend as companies continue to increase capital budgets to fund cloud and AI infrastructure growth.

Brookfield Renewable recently inked a landmark renewable energy framework agreement with Microsoft, one of the largest players in the AI segment. BEP expects to deliver 10.5 gigawatts of new renewable energy capacity to Microsoft in the U.S. and Europe between 2026 and 2030. Investors should note that 10.5 gigawatts can power close to eight million homes, and the deal will be a key driver of earnings growth for Brookfield in 2026 and beyond.

Is Brookfield Renewable a good stock to buy now?

In the first quarter (Q1) of 2024, Brookfield Renewable reported a funds flow from operations of US$296 million or US$0.45 per share, an increase of 8% year over year. The company expects to grow its FFO by 10% in 2024 despite a sluggish macro environment.

It ended Q1 with US$4.4 billion in total liquidity, which allowed it to deploy significant capital into growth projects and acquisitions.

Brookfield Renewable stock has returned more than 1,500% to shareholders since June 2004 after adjusting for dividends. By leveraging its funding sources and operational capabilities, it expects to deliver annual returns between 12% and 15% to long-term shareholders.

Analysts remain bullish on BEP stock and expect it to surge 17% in the next 12 months. After accounting for dividends total returns could be closer to 22%.

Should you invest $1,000 in Whitecap Resources right now?

Before you buy stock in Whitecap Resources, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Whitecap Resources wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Aditya Raghunath has positions in Brookfield Renewable Partners. The Motley Fool recommends Brookfield Renewable Partners and Microsoft. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Canadian Red maple leaves seamless wallpaper pattern
Dividend Stocks

5 Canadian Dividend Stocks to Buy and Hold for the Next 20 Years

These Canadian stocks have paid dividends for decades, making them reliable investments to generate regular passive income.

Read more »

Dividend Stocks

3 Canadian REIT Stocks to Buy and Hold for the Next Quarter-Century

These three Canadian REITs trade cheaply and are highly reliable, making them some of the best stocks you can buy…

Read more »

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Dividend Stocks

1 Practically Perfect Canadian Stock Down 24% to Buy Now and Hold for Life!

CNR stock is a top Canadian stock for investors, especially with shares down on the TSX today.

Read more »

Canada national flag waving in wind on clear day
Dividend Stocks

The Best Canadian Stocks to Buy Right Away With $30,000

If you have $30,000 you're willing to invest, these are some of the first Canadian stocks to consider on your…

Read more »

rail train
Dividend Stocks

What to Know About Canadian Pacific Railway Stock for 2025

CP stock has now gone through a major merger, so what do investors have to look forward to?

Read more »

ways to boost income
Dividend Stocks

Top Canadian Value Stocks I’d Buy for Dividend Growth and Appreciation

If you are looking for income and capital appreciation, here are three Canadian value stocks for a great total return…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Canadian Stock to Buy With $2,000 Right Now

The company’s powerful combination of growth, income, and value, positions it well to deliver solid returns, making it a smart…

Read more »

Transparent umbrella under heavy rain against water drops splash background. Rainy weather concept.
Dividend Stocks

This 10.6 Percent Dividend Stock Pays Cash Every Single Month

Are you looking to invest for a rainy day? This 10.6% dividend stock pays cash every month, irrespective of the…

Read more »