How I’d make a growing passive income with cheap dividend stocks in 2021

first_img I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. How I’d make a growing passive income with cheap dividend stocks in 2021 Image source: Getty Images. Our 6 ‘Best Buys Now’ Shares Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Peter Stephens | Friday, 1st January, 2021 Cheap dividend stocks could offer more than just a high yield in 2021. In many cases, their financial positions and profit potential means they could deliver a rising dividend in the coming years.As such, now may be the right time to buy a selection of income shares with affordable dividends and improving financial prospects. They could provide a generous passive income in an era when other assets offer disappointing returns.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Selecting cheap dividend stocks with growth potentialSome cheap dividend stocks may face difficult futures at the present time. Risks such as coronavirus and political change could hold back their financial performances in the short run.As such, it’s important to assess their financial prospects before buying them. For example, companies with low debt levels and solid financial positions may find it easier to pay a rising dividend despite challenging operating conditions.Similarly, businesses that currently pay a modest proportion of their profit to shareholders as a dividend may have greater scope to raise their income payouts in 2021 and in the coming years.Meanwhile, cheap dividend stocks with bright long-term futures may be among the most attractive means of generating a growing passive income. For example, companies that stand to benefit from the increasing digitisation of many industries, such as retail, could generate higher profitability that translates into a rising dividend.Managing risk for a sustainable passive incomeOf course, an uncertain economic outlook means buying a selection of cheap dividend stocks is arguably more important than ever. Investors who rely on a small number of companies for their income may find their financial prospects are negatively impacted. Even if a small number of them struggle in 2021.Diversifying across not only different industries, but also various regions, could be a shrewd move. The coronavirus pandemic is affecting different parts of the world to differing extents. Therefore, it could be a sound move to spread investment across dividend stocks that operate in multiple geographies. Doing so may limit the negative impact of challenging economic circumstances in localised areas caused by lockdown measures.A long-term viewWhile obtaining a growing passive income via cheap dividend stocks is an achievable goal in 2021, taking a long-term view is still a good idea. It may take some of today’s most attractive income shares a number of years to deliver on their potential. Weak investor sentiment that makes them attractive purchases today, due to their low valuations, may take time to reverse in sectors currently struggling to grow sales and profitability.As such, by taking a long-term view, it’s possible to fully benefit from a likely economic recovery. Over time, this could lead to a fast-paced growth in passive income that improves an investor’s financial situation. “This Stock Could Be Like Buying Amazon in 1997” See all posts by Peter Stephens Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. 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