I’d put £62 a week into this renewable energy stock for £500 a year in passive income

The UK stock market has many high yielding dividend stocks to provide reliable and growing passive income. However, not all that glitters is gold. Some high-yielding stocks don’t appeal to me because I don’t believe the payouts are consistent.

However, I think the renewable energy sector offers some exciting opportunities for passive income. Here is one FTSE 250 stock that stands out for me.

Energy transition

Renewable Energy Infrastructure Group (LSE: TRIG) is a £3.2bn renewable energy investment company that invests in assets that generate electricity from renewable sources. TRIG (for short) has a broad portfolio of wind and solar farms in the UK and five other European countries.

The company estimates 1.1m properties are supported from its portfolio. It sells the electricity generated by these assets, then distributes most of that money as income to shareholders.

What I like most about this investment is that it is in an interesting sector. The growth of the world’s capacity to generate electricity from renewable technologies will certainly accelerate in the coming decades.

That gives TRIG a solid foundation for reliable passive income payouts. Also, I like the number of countries it operates in, which eliminates the potential for bad weather in one country (no wind, for example).

£500 per year in passive income

The dividend yield at 5.2% is 0%. One shows 131p, as I write. That means I need about 7,500 shares to generate £500 a year in passive income. That would set me back about £9,825.

That’s a pretty big amount. It is clear that not every investor can spend that kind of money. But that doesn’t mean I can’t buy a few shares every week and figure it out over time.

For example, if I buy 48 shares a week, that will cost me £62 (depending on the situation). Which is clearly more affordable. If I were to be consistent every week for a year, I would have about 2,500 shares. He will pay £170 a year.

After three years, I have 7,500 shares, which will pay me over £500 in annual passive income. It could be even more, as next year’s payout is expected to rise to 7p per share (from 6.8p today).

Of course, stock prices won’t be static for three years. It will rise and fall with the natural ups and downs of the market.

Attention

Of course, this is for illustration only. I wouldn’t put all my money into one stock. And I’m lucky that my brokerage account offers commission-free trading. Some platforms still charge for each transaction, which will increase the cost significantly.

It should also be noted that TRIG occasionally raises capital through share placements to finance growth. This can cause short-term volatility in stock prices.

And more broadly, there is no guarantee that dividend payments will be made. It can be reduced or cut entirely to preserve capital. However, TRIG’s solid track record, dating back almost a decade now, gives us confidence that it is a good candidate for generating passive income.

Thus, I intend to add it to my own portfolio as soon as I have capital available.