NPI:CC - Beat the TSX With This Cash-Gushing Dividend Stock
2024-02-29 16:00:00 ET
Yes, it’s possible. While nothing in the stock market is guaranteed, there is certainly the possibility to beat the TSX with a dividend stock — that is, if it’s the right dividend stock.
After all, beating the TSX today isn’t an easy feat. The index holds a compound annual growth rate (CAGR) of about 4% in the last decade. So, what you’ll need to find is a company that can offer to give you that not just through dividends but returns as well.
What to consider
If you want to beat the TSX, the best option you can choose is to invest in a dividend stock. These companies offer you steady streams of income, with the ability to also take advantage of compounding. You can simply reinvest those dividends to allow your compounding investment to increase even more over time. This can achieve even more returns than just investing an amount only once.
Furthermore, dividend-paying companies have a history of lower volatility. These are usually more established businesses that tend to stick to a certain yield that investors can depend on. But that can also change on a dime.
Consider the oil and gas industry. This was supposed to be the go-to sector for long-term income. Now, we’re looking elsewhere. This is why the next oil and gas sector should easily be renewable energy .
Consider this stock
If you want to beat the TSX today, then you’re going to want a high-yielding dividend stock with a long history of dividend growth. That’s why I would consider Northland Power ( TSX:NPI ). NPI stock is perfect as it focuses on clean energy, with resources including wind, solar and more. It operates around the world, including in Asia, Europe, Latin America, and, of course, Canada and the United States.
This global reach spreads out risk and allows for more stable cash flow. These come from long-term contracts, with even more project development coming down the pipeline. What’s more, the company is a solid dividend provider, increasing it for the last eight consecutive years .
Recent earnings, more growth
During the most recent earnings report, NPI stock reported higher-than-expected earnings per share, reaching $1.13 for the quarter. This was double what analysts had expected. Furthermore, it generated cash flow of $234 million, with a focus on growth for its key projects. While year-over-year earnings per share were down, and it reported a net loss, there was hope given fourth-quarter earnings.
Overall, NPI stock looks like a strong company to consider for long-term growth. Renewable energy continues to be a huge field of investment for many. And NPI stock offers a diverse range of products all around the world. What’s more, it’s positioned for even more growth, with construction progressing for various projects. Plus, as interest rates and inflation fall, it will be easier for the stock to turn a profit.
Bottom line
NPI stock is a solid stock offering a 5.2% dividend yield as of writing. That’s also dished out monthly for even more opportunities to create compound interest. That’s also higher than the performance of the TSX! So, even if NPI stock stays still, you’ll be earning more. But over time, NPI stock has a CAGR of 3.7% as of writing. And that comes after a huge drop in all-time highs. So, we could see an increase in share price surge in the next few years. Meanwhile, you’ll still be beating the market with this cash-gushing dividend stock.
The post Beat the TSX With This Cash-Gushing Dividend Stock appeared first on The Motley Fool Canada .
Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .
2024