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Buy 1,000 Shares of This Top Dividend Stock for $100/Month in Passive Income

Image source: Getty Images
Image source: Getty Images

Written by Jitendra Parashar at The Motley Fool Canada

If you’re looking for a reliable and consistent source of monthly passive income in Canada, you might want to consider investing in some strong dividend stocks. In this article, I’ll highlight a top monthly dividend stock that offers the potential to earn $100 every month in passive income from a 1,000-share investment. Before I give you the math for that, let’s first explore what makes this stock worth considering right now.

A top Canadian dividend stock for monthly passive income

Before buying any dividend stock, you must carefully analyze its financial growth trends, dividend sustainability, and fundamental growth potential for the long term. A top Canadian dividend stock that meets these criteria is Northland Power (TSX:NPI).

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This Toronto-headquartered company primarily focuses on producing power using clean, renewable resources, including wind, solar, and efficient natural gas. Northland currently has a market cap of $6.1 billion as its stock trades at $23.71 per share after rallying by 13% over the last two months. At this market price, NPI stock offers a decent 5.1% annualized dividend yield and distributes these payouts every month.

Key reasons to buy this stock now

The ongoing growth trends in Northland’s financials look impressive. It registered a 21.4% YoY (year-over-year) jump in its total revenue for the first quarter of 2024 to $755 million due partly to higher wind resources across all of its offshore wind facilities, exceeding Street analyst expectations of $704.5 million by a wide margin. Despite inflationary pressures and other cost pressures due to personnel and realignment expenses, the company’s adjusted earnings also grew positively by 7.4% YoY to $0.29 per share during the quarter. Additionally, its adjusted free cash flow improved to $0.88 per share in the last quarter compared to $0.72 per share a year ago, reflecting Northland’s strong cash generation capabilities despite the challenging economic environment.

Another key reason that makes Northland Power a very attractive monthly dividend stock to buy for the long term is its solid growth potential with geographically diverse revenue sources. The company has been expanding its clean energy-focused power generation operations in different regions across the globe, including Europe, Asia, and Latin America. This diversification could help it minimize risk and support a steady financial performance in the future.

In its latest earnings report, Northland also highlighted how it is continuing to focus on the development of major projects to accelerate future growth. For example, the Hai Long offshore wind project in Taiwan is progressing well, while the Baltic Power project in Poland is similarly on track, with substantial progress in turbine manufacturing. I expect these projects to accelerate Northland Power’s long-term financial growth and help its share prices soar as the demand for renewable energy surges in the years to come.

COMPANY

RECENT PRICE

NUMBER OF SHARES

DIVIDEND

TOTAL PAYOUT

FREQUENCY

Northland Power

$23.71

1,000

$0.10

$100

Monthly

Prices as of June 18, 2024

Foolish bottom line

If you want to earn $100 every month in passive income from its dividends, you can buy 1,000 shares of Northland Power at the current market price. To buy these many shares, however, you’ll need to invest $23,710 in its stock. While this example gives you a good idea of how you could smartly create a reliable source of monthly passive income by investing in quality dividend stocks, you should always try to diversify your portfolio with a variety of dividend-paying stocks rather than relying heavily on a single investment to minimize your risks.

The post Buy 1,000 Shares of This Top Dividend Stock for $100/Month in Passive Income appeared first on The Motley Fool Canada.

Should you invest $1,000 in Northland Power right now?

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The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

2024