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The stock market is trading near all-time highs and could gain further pace with multiple interest rate cuts on the horizon. This gives investors the opportunity to identify quality dividend stocks and benefit from a recurring stream of income as well as capital gains over time.
A once-in-a-decade opportunity to buy income stocks
With inflation slowing and interest rates falling, the time has come to buy and hold stocks with fundamentally strong dividends that are trading at a cheap valuation. A tasty dividend yield, coupled with share price appreciation, should help long-term investors benefit from market-beating returns over the next decade. Here are two such dividend stocks you can consider buying right now.
Brookfield Renewable Partners Stock
Valued at $25 billion by market capitalization, Brookfield Renewable Partners (TSX:BEP.UN) owns a portfolio of renewable energy generation facilities in the Americas, Europe and Asia. It generates electricity through hydroelectric, wind, solar, distributed generation, pumped storage and biomass sources.
Brookfield Renewable continues to invest capital in growth opportunities that allow it to gain traction and benefit from economies of scale. In the second quarter of 2024, the company brought online about 1.4 gigawatts of new capacity. If we include its development and acquisition activities, Brookfield Renewable invested almost $1 billion in the June quarter.
In particular, Brookfield Renewable is poised to benefit from the artificial intelligence (AI) megatrend. For example, data center investment continues to accelerate globally due to massive investments in generative AI platforms.
In fact, data centers could account for a fifth of total U.S. electricity consumption by the end of the decade, acting as a secular tailwind for Brookfield Renewable and other clean energy peers. Brookfield also estimates that global installed capacity for electricity generation will double globally over the next 20 years.
Brookfield Renewable pays shareholders an annual dividend of $1.42 per share, which translates to a future yield of nearly 5%. Furthermore, these payments have almost doubled in the last 13 years.
Dream Industrial REIT Stocks
Valued at $4.2 billion by market capitalization, Industrial Dream (TSX:DIR.UN) pays shareholders an annual dividend of $0.70 per share, indicating a yield of 4.7%. Dream Industrial owns and operates a portfolio of cash-generating industrial properties in key North American markets, while pursuing a strong presence in Europe.
In Q2 2024, Dream Industrial grew its net operating income by 5% year-over-year, while its FFO (funds from operations) per unit stood at $0.25, indicating a payout ratio of around of 70%. It leased more than 500,000 square feet of high-priced projects in regions such as Ontario and Alberta. The real estate investment trust continues to execute its capital recycling initiatives to improve the quality of its portfolio and completed a $50 million drawdown in the June quarter.
Dream Industrial CEO Alexander Sannikov stated: “With nearly $600 million of available liquidity and our marginal cost of debt declining by more than 50 basis points since last quarter, our balance sheet remains strong.”
Given consensus target price estimates, Dream Industrial REIT is trading at a 10% discount to those estimates. If we adjust dividends, cumulative returns will be closer to 15% over the next 12 months.