Brookfield Renewable(NYSE: BEPC)(NYSE: BEP) has a terrific track record of paying dividends. The leading global renewable energy producer has paid them since 2001. It has steadily grown its payout over the years (a 6% compound annual rate), including delivering at least 5% annual growth in each of the last 13 years.
The renewable energy dividend stockcurrently offers a high dividend yield (over 5% compared to less than 1.5% for the S&P 500). Because of that, investors can generate a lot of dividend income from Brookfield Renewable.
Brookfield Renewable currently makes quarterly dividend payments of $0.355 per share ($1.42 annually). At that rate, you'd need to own over 704 shares of Brookfield Renewable to generate $1,000 of dividend income each year. With the stock price recently over $28 apiece, you'd need to invest roughly $19,825 into the stock to reach that annual income level.
That's a lot less money than you'd need to invest in an S&P 500 index fund to generate the same amount of annual dividend income. Given its much lower yield (less than 1.3%), you'd need to invest over $77,500.
Brookfield Renewable can easily support its high-yielding dividend. The company generates very stable cash flow. It has signed long-term power purchase agreements with utilities and large corporate buyers for about 90% of the power it produces. Those agreements supply it with stable and steadily rising cash flow (about 70% of its contracts link power rates with inflation). Brookfield Renewable also has a strong investment-grade balance sheet.
The company expects to grow its high-yielding payout at a healthy rate in the future, targeting 5% to 9% annual growth. Brookfield should have no trouble achieving that goal. It has lots of visibility into its growth prospects, driven by inflation-linked rate increases, development projects, and accretive acquisitions. Those factors power its view that it can grow its cash flow per share by more than 10% annually through 2028. With a high-yielding payout and more income growth ahead, Brookfield Renewable is an excellent option for those seeking to generate passive income.
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Matt DiLallo has positions in Brookfield Renewable and Brookfield Renewable Partners. The Motley Fool has positions in and recommends Brookfield Renewable. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.
