Investing $7,000 in dividend stocks can be a delightful way to generate passive income. Dividend stocks provide periodic payouts, allowing you to enjoy a steady income stream while potentially benefiting from stock price appreciation. It's like having your cake and eating it, too!

However, it's essential to look beyond just the dividends. Considering the overall returns, which include both dividend income and capital gains, offers a more comprehensive picture of an investment's performance. After all, a high dividend yield might be enticing, but if the stock's value declines, your total return could suffer. Balancing dividend income with potential growth ensures your investment remains robust and rewarding.

Consider Waste

Enter Waste Connections (TSX:WCN), a dividend stock that has been turning heads in the investment community. Specializing in waste collection, transfer, disposal, and recycling services across North America, WCN combines the stability of a utility with the growth potential of a well-managed enterprise.

Let's dive into some numbers. In the third quarter of 2024, WCN reported impressive financial results. Revenue climbed to $2.34 billion, marking a 13.3% increase year over year. Net income also saw a significant boost, reaching $308 million, up from $229 million during the same period in 2023. This robust performance showcases the company's ability to grow consistently, even in a competitive market.

But there's more! WCN doesn't just hoard its profits; it shares them with its investors. The dividend stock recently announced a 10.5% increase in its regular quarterly dividend, reflecting its commitment to returning value to shareholders. This marks the 13th consecutive year of double-digit dividend increases, a testament to WCN's financial health and shareholder-friendly approach.

Future outlook

Looking ahead, WCN's future seems as bright as a well-lit recycling plant. The dividend stock raised its full-year 2024 outlook, now estimating revenue of approximately $8.9 billion, up $150 million from its original forecast. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) are projected to be around $2.91 billion, indicating strong operational efficiency and profitability. Such optimistic projections suggest that WCN is well-positioned for sustained growth.

Moreover, WCN's strategic acquisitions and expansions have strengthened its market position. The company's focus on exclusive and secondary markets across the U.S. and Canada reduces competition and enhances profitability. This strategic approach has been a key driver behind its consistent financial performance and growth. So, how much could investors gain from that $7,000, considering returns and dividends? With shares up 27% in the last year, let's see what would happen if shares rise that much again.

Bottom line

In conclusion, allocating $7,000 to a dividend stock like Waste Connections can be a savvy move for generating passive income. You'll gain about $1,800 in returns plus a little bonus of about $20 in dividends. In total, it could be $1,821.12! By considering both dividend yields and overall returns and choosing a company with a solid track record and promising outlook, you're setting the stage for a fruitful investment journey.