Prudent investors should plan out their future purchases well in advance of actually doing so. This allows an investor to justify each move and avoid making a costly mistake. Examples of common mistakes that investors make include giving into the FOMO and other impulse decisions. With that said, I am planning to buy Brookfield Renewable Partners (TSX:BEP.UN)(NYSE:BEP) before any other stock in 2021.
The company is a leader within the renewable utility industry
Brookfield Renewable Partners is the premier renewable utility company in Canada. In fact, it is a global industry leader in its field. Currently, the company operates a portfolio of approximately 19,400 MW consisting of hydroelectric, solar, wind, distributed generation, and storage facilities. Over the next few years, investors can expect this number to continue to grow. Brookfield Renewable’s management has made it a priority to continue acquiring assets.
This year, Brookfield Renewable has announced several new projects and acquisitions. The most notable could possibly be the completion of its merger with TerraForm Power. This merger expands Brookfield Renewable’s wind and solar businesses in North America and Europe, enhancing its position as one of the world’s largest pure-play renewable power businesses.
Brookfield Renewable is also expanding its reach in emerging markets like Brazil and India. In its Q3 report, the company announced the acquisition of a 1,200 MW shovel-ready development project in Brazil. The assets acquired in India are expected to generate returns in excess of 15%.
Brookfield Renewable as an investment
One of the most attractive aspects of this company is the fact that it is largely owned by Brookfield Asset Management. As of August 2020, the parent company held a 57% ownership stake in Brookfield Renewable.
The company has also stated that its long-term growth target is an annual return of 12-15%. This would include growing its dividend by 5-9% on an annual basis. Brookfield Renewable has indeed done an excellent job at meeting these targets. Since 2012, the company has been able to grow its dividend at a compound annual growth rate of 6%. As of August 2020, Brookfield Renewable’s five-year annualized price performance was reported to be 21%.
There are multiple catalysts moving forward
Among the many catalysts that will help Brookfield Renewable continue to grow are the results of the recent American presidential election. As part of his winning campaign, Joe Biden declared his support for clean energy. Biden’s team announced that it would commit $400 billion in investments toward clean energy over the next 10 years.
As a result, we have already seen renewable energy companies post outstanding returns over the past year. Examples of great Canadian renewable energy companies include companies Northland Power (+69%) and Innergex Renewable Energy (+64%). While investors shouldn’t expect these kinds of returns every year, it does show the positive sentiment that investors have for companies in this industry.
Brookfield Renewable Partners is a global leader in an important, emerging industry. With more than 19,000 MW of assets globally, the company poses a very attractive investment proposition. Because of this, I plan to make it my first stock purchase in 2021.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Jed Lloren has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Brookfield Asset Management. The Motley Fool recommends BROOKFIELD ASSET MANAGEMENT INC. CL.A LV.