Top Dividend Stock with a Rising Payout
With a top dividend growth stock, one of the best things to
do is to get in early. This is because the current yield might be just 5.6%,
but if an investor purchases its shares today, the yield on cost could rise to
11.2% in the future. Let me explain.
The key with dividend growth investing is to let the power
of compounding do the work. You might have heard of something called the “rule
of 72,” which is an easy way to calculate how long it would take for an
investment to double at a fixed rate of interest. All you need to do is divide
the number 72 by the annual rate of return, and the result is an estimate of
the number of years it would take for the investment to deliver 100% return.
While the “rule of 72” is often used to estimate portfolio
return, it can also be applied to the calculation of a future income stream.
For investors of Brookfield Renewable Partners LP
(NYSE:BEP), that income stream is provided by the company’s dividends.
Right now, the partnership pays quarterly distributions of
$0.4645 per unit. Since BEP stock trades at $33.05 apiece, its quarterly payout
translates to an annual yield of 5.6%.
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