Do you want to get a considerable amount of passive income coming in with relatively little invested?
If so, you should go with dividend stocks.
Government bonds have almost no yield these days, and corporate bonds are barely better. Real estate, meanwhile, is not truly passive, as it entails a lot of maintenance and repair work.
Dividend stocks are the way to go. To illustrate that point, here’s a dividend stock that could net you $2,580 per year in passive income with just $50,000 invested.
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Brookfield Renewable
Brookfield Renewable Partners (TSX: BEPC)(TSX: BEP.UN) is a Canadian renewable energy company. It sells power on the open market, mainly to companies like utilities, major corporations, and increasingly, tech companies. The company sources power from a variety of sources, most notably wind, hydro and solar. It also has investments in nuclear energy through Westinghouse, of which it owns 50%.
Income potential
Brookfield Renewable has a pretty high dividend yield. Its distribution is $0.535 per quarter, or $2.14 per year. Its stock price is $41.47. 2.14 divided by 41.47 is 0.0516, or 5.16%. So, when you invest $50,000 into Brookfield Renewable Partners, you should get $2,580 back in annual passive income. Here’s how the math on that works.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Brookfield Renewable | $41.47 | 1,205 | $0.535 per quarter ($2.14 per year) | $644.675 per quarter (roughly $2,580 per year) | Quarterly |
As you can see, Brookfield Renewable will generate considerable income if its dividend is maintained or increased. Will it be? In the next section, I will explore the company’s future prospects to see whether that’s the case.
An incredible set of projects
We can gauge Brookfield Renewable’s future dividend potential by looking at its project pipeline. This tells us how much growth the company has in store. The company’s earnings growth, in turn, can power its dividend growth.
Here are Brookfield Renewable’s biggest projects today:
- An ongoing agreement to supply 10.5 gigawatts of clean power to Microsoft.
- A similar deal to supply three gigawatts to Alphabet.
- Westinghouse’s plan to build 10 nuclear power plants in the United States (this one is not confirmed).
Together, these developments make the case that Brookfield Renewable has a good future ahead of it. In the next section, we’ll see whether the company’s financials back that claim up.
Financials
When it comes to growth, Brookfield Renewable has given a mixed showing in recent years. Its revenue has grown consistently, up 9% in the trailing 12-month period and more over longer timeframes. However, its earnings are down in the same 12-month period. The company’s earnings have compounded at an impressive 24% compound annual growth rate over 10 years, but the last few years have been a little disappointing. Its margins include a 55% gross margin, a 51% EBITDA margin and a 13% EBIT margin. These metrics indicate that Brookfield Renewable Partners is fairly profitable.
The bottom line
The bottom line on passive income is that you need to pick your source carefully. Invest well in dividend stocks, and you can live comfortably for life. Go with lesser passive-income sources, and you could end up struggling. Brookfield Renewable appears to be a solid bet today.
