Shares of Brookfield Renewable (NYSE: BEPC)(NYSE: BEP) have slumped more than 15% from their 52-week high. That sell-off came even though the leading global renewable energy producer grew its cash flow per share by more than 15% in the first quarter. With its stock price down, Brookfield Renewable’s dividend yield is up over 4%.
Here’s why buying Brookfield Renewable today might be one of the best financial decisions you’ll ever make.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
Table of Contents
High-powered growth ahead
Brookfield Renewable is a leader in owning, operating, and developing renewable energy and sustainable solutions. The company sells around 90% of the electricity it produces under long-term, fixed-rate power purchase agreements (PPAs) with utilities and large corporations. Most of its PPAs link rates to inflation (70% of its revenue). That provides it with a stable and steadily growing stream of cash flow (2% to 3% annual growth from inflation escalation).
The company expects to deploy $9 billion to $10 billion of capital over the next five years to support surging global power demand driven by catalysts such as increased electrification, reindustrialization, and AI data centers. Brookfield aims to deploy around $850 million in capital each year to develop additional renewable energy capacity (an annual run rate of 10 gigawatts by next year), which should add 4% to 6% per year to its cash flow per share. Additionally, it expects to continue making value-enhancing acquisitions. Brookfield and a partner agreed to buy Boralex in a $9 billion deal earlier this year. Add in growth from margin-enhancing activities, such as securing higher rates as legacy PPAs expire, and Brookfield expects to deliver more than 10% annual cash flow per share growth for at least the next five years. Given the long-term demand for clean power, Brookfield should grow at a healthy rate for decades.
An attractive and growing income stream
Brookfield Renewable also provides investors with a top-notch income stream. The company’s current yield of more than 4% is well above the S&P 500‘s rate of around 1.1%. It has an exceptional record of paying dividends, having increased its payout by at least 5% each year since 2011.
The leading renewable energy dividend stock is in a strong position to continue raising its high-yielding payout. Brookfield aims to grow its dividend by 5% to 9% per year. With its earnings expected to rise by more than 10% annually, its dividend payout ratio will steadily decline from an already conservated 75% over the last 12 months, making its dividend even more sustainable over the long term.
