If you’re looking for income, you’ve come to the right place. Here are two dividend stocks with big yields. Brookfield Renewable Partners LP (TSX:BEP.UN)(NYSE:BEP) and Slate Office REIT (TSX:SOT.UN) dipped 3% and 4%, respectively, on June 7.
Because of the dip, investors can now buy them for a bigger dividend yield than before. Brookfield Renewable offers a yield of 6.2% at $37.51 per unit, and Slate Office offers a yield of 9.7% at $7.76 per unit.
Investing $5,000 in the companies today will generate an annual income of about $310 and $485 each, respectively.
The businesses
Brookfield Renewable invests in renewable power facilities globally. Its hydropower facilities generate 87% of its power, while its wind facilities generate 12%.
Brookfield Renewable has 10,400 megawatts of capacity across seven countries. North America contributes 65% of its cash flow, Brazil contributes 20%, Colombia contributes 10%, and Europe contributes 5%.
Slate Office is a young real estate investment trust (REIT) that had 34 assets totaling 4.4 million square feet at the end of the first quarter. It focuses on high-quality, non-trophy downtown and suburban office properties that can be found at significant discounts to replacement costs.
Why did the companies dip?
Brookfield Renewable announced an $800 million equity offering at $37.55 per unit. The general manager, Brookfield Asset Management Inc. and related entities will buy about $400 million of the $800 million. After that they’ll own about 61.4% of the company.
Slate Office announced acquisitions of $85 million as well as a public offering of $50 million at $7.85 per unit.
Of the $50 million public offering, $35.6 million (or 71.2% of the offering) is a treasury offering by Slate Office, which means the REIT is selling the units that it bought back before at an average lower-cost basis, and the remainder $14.4 million is a secondary offering.
When it comes to equity offerings, investors first think of dilution of shareholders’ equity. However, if the proceeds are used for good causes, such as investing activities or reducing debt, the offerings should create future shareholder value.
Where’s the money going?
Brookfield Renewable is using the net proceeds for general corporate purposes and to reduce the debt that it previously took on to grow the business.
This is a good strategy. For example, when Brookfield Renewable made the big acquisition of Isagen in January, the shares fell to as low as $32. Now that the shares have recovered to higher levels, it’s a better time to make an equity offering.
Slate Office is planning to acquire Gateway Centre, a suburban office complex that includes two mid-rise office towers in Markham, Ontario, for $57.5 million. This complex has a strong occupancy of 95%.
Additionally, the REIT is also planning to increase its interest in three office properties in St. John’s, Newfoundland, from 30% to 49% by investing another $27.3 million.
These acquisitions are expected to close by the end of the second quarter, and they are expected to be immediately accretive to the REIT’s adjusted funds from operations on a per-unit basis.
Conclusion
Brookfield Renewable and Slate Office shares have dipped 3-4% because of their equity offerings. However, these offerings are intended to reduce debt or grow the business, which creates value over the long term.
So, income investors should consider Brookfield Renewable at or under $37.55 per unit and Slate Office at or under $7.85 per unit for a yield of 6.2% and 9.7%, respectively.
