Generating passive income can help get you on the road to financial freedom. It can help offset some of your expenses, reducing the time you need to actively work to fund your lifestyle. The more passive income you can produce, the less reliant you’ll become on your career for income.
Buying stocks that pay dividends is a great way to start earning durable passive income. Two great dividend stocks to buy for income right now are Brookfield Renewable (NYSE: BEPC)(NYSE: BEP) and Enbridge (NYSE: ENB). They pay high-yielding dividends that should continue growing in the decades ahead.
Brookfield Renewable has paid a very dependable dividend over the past couple of decades. The leading global renewable energy producer has grown its payout at a 6% compound annual rate since 2001. It raised its payment by at least 5% each year since 2011.
The company currently pays a dividend yielding more than 5.6%. That’s several times higher than the S&P 500‘s dividend yield of 1.2%. At that rate, every $100 invested into Brookfield Renewable’s stock would produce $5.60 of annual dividend income each year. That compares with only about $1.20 of dividend income from a similar investment in an S&P 500 index fund.
Brookfield Renewable aims to increase its dividend at a 5% to 9% annual rate over the long term. It should have plenty of power to achieve that target. The company has several growth drivers, including inflation-linked rate increases, rising power prices, development projects, and acquisitions. Those catalysts drive the company’s view that it can grow its funds from operations (FFO) per share at a more than 10% annual rate over the next decade.
Development projects are a major growth driver for Brookfield Renewable. It currently has a massive 200 gigawatts (GW) of projects under development, compared with its 37 GW operating portfolio. And it has about 65 GW of projects in its advanced stage pipeline that it should complete by 2030. Development projects will grow its FFO per share by about 4% to 6% annually over the next several years. With renewable energy demand only expected to keep growing, Brookfield should be able to continue expanding for decades to come.
Enbridge has been an extremely reliable dividend stock. The Canadian pipeline and utility company has paid dividends to its investors for about 70 years and has raised its payout annually for the past 30 in a row. Its dividend currently yields more than 6%.
The company generates very stable cash flow to support its high-yielding dividend. Roughly 98% of its earnings come from cost-of-service agreements or long-term contracts. Those agreements give Enbridge a lot of visibility into its earnings. That’s evident by the fact that it was well on its way to delivering its 19th straight year of achieving its annual financial guidance in 2024.
