These cash-generators can boost your passive income.
Seeing steadily growing streams of cash deposited into an investment account year after year can make any investor smile. Read on to learn more about two top-tier stocks that can help you earn more dividend income from your portfolio.
Brookfield Renewable
The trend toward sustainable power sources is set to provide lucrative opportunities for income-focused investors. Brookfield Renewable (BEPC -3.35%) (BEP -4.24%) is particularly well suited to deliver gains to shareholders fueled by clean energy.
Brookfield Renewable aims to help the world meet its decarbonization goals. It owns an ever-expanding portfolio of wind, solar, hydroelectric, nuclear, and other power-producing assets ranging across five continents.
The company has a proven ability to identify projects with superior profit potential. It passes the cash generated from these investments on to its investors via dividends, and currently yields over 4%.
In addition to climate change concerns, the booming demand for artificial intelligence (AI) services is driving companies to step up their investments in clean energy technology. In May, Brookfield struck a blockbuster deal to supply Microsoft with more than 10.5 gigawatts of renewable energy capacity to power its fast-growing cloud computing operations. For context, that’s enough energy to power several million homes.
The deal, which is nearly eight times bigger than any other corporate power-purchase agreement signed to date, highlights Brookfield Renewable’s ability to deliver sustainable energy at a massive scale. Management, in turn, believes it could be the first of many power-supply agreements with other large tech companies.
The pact with Microsoft bolsters Brookfield’s already well-stocked project pipeline. All told, the dividend stalwart says its development plans should enable it to increase its cash payout to investors by as much as 9% annually.
Ares Capital
If you would like another great source of passive income, consider Ares Capital (ARCC 0.80%). This dependable dividend stock’s yield currently stands at a wealth-building 8.9%.
Ares operates as a business development company (BDC). It supplies private companies with the capital they need to scale up their operations, with a focus on loans to middle-market businesses, defined as those with revenue of $10 million to $1 billion.
It’s a huge addressable market. Middle-market companies collectively generate over $10 trillion in annual sales in the U.S. Yet most banks pay less attention to these businesses than they do to their corporate clients.
Therein lies Ares’ opportunity. By providing much-needed financing services to these underserved customers, it can often earn returns on its investments of over 10%. That’s how it can afford to pay such sizable dividends to its shareholders.
It’s important to note that Ares generates these attractive returns while carefully managing risk. Clients tend to be lower-risk borrowers with competitive advantages, reliable cash flow, and seasoned leadership.
Moreover, its $23.1 billion portfolio is well diversified. As of March 31, Ares held investments in 510 companies spanning a wide array of industries and geographies.
Best of all, its BDC structure requires that it pay out at least 90% of its profits to its shareowners every year. That means you can expect this dividend dynamo to continue to reward its investors with bountiful streams of income for many years to come.
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Brookfield Renewable and Microsoft. The Motley Fool recommends Brookfield Renewable Partners and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Add Comment