BUY ALERT: 1 Top Dividend-Growth Stock for Your Portfolio

This top stock has characteristics that both dividend and growth investors will appreciate.

| More on:
warning or alert

Image source: Getty Images

There aren’t many stocks that both dividend and growth investors can agree on. Normally, dividend stocks appreciate much too slowly for growth investors to care about. But growth stocks usually don’t pay a dividend, which is pretty much the point in dividend investing. What about a company that pays a strong, reliable dividend and has shown market-beating performance over the past five years? That sounds like a stock that both camps can agree on.

Fortunately, such a stock exists. Brookfield Renewable Partners (TSX:BEP.UN)(NYSE:BEP) is a Canadian Dividend Aristocrat and has beaten the market over the past few years. It is a company that I have held since 2019 and will continue to add to in the future. In this article, I will discuss the argument for both dividend and growth investors to add Brookfield Renewable Partners to their portfolio.

The case for dividend investors

For dividend investors, the case is clear. Brookfield Renewable is a Canadian Dividend Aristocrat, having raised its dividend for the past 11 years. Company management has continued to state that its goal is to provide distribution increases of 5-9% on an annual basis. Since 2012, Brookfield Renewable’s dividend has increased at a compound annual growth rate of 6%. That’s very impressive, considering the company is still allocating a large portion of its funds towards growth projects.

When it comes to reliability in a dividend, investors usually look to the longevity of a company’s increases. However, another important aspect to consider is whether that company will be able to continue growing that dividend in the future. Brookfield Renewable calculates its available cash for distributions from its funds from operations (FFO). In its Q4 shareholder’s letter, the company stated that the company’s annual FFO increased 6% year over year. This suggests that future dividend increases may be sustainable at the same rate.

The case for growth investors

As exciting as the company may be from a dividend point of view, the argument for investment from a growth perspective may be even more intriguing. Brookfield Renewable Partners is a global leader in the renewable utility sector, with assets around the world. Currently, its portfolio is capable of generating more than 19,000 MW of power. Through its on-going construction projects, the company estimates 23,000 MW of generation in the near future.

Diving a bit deeper into those growth projects, Brookfield Renewable has completed a number of transactions over the past year. It acquired Exelon Generation Company’s United States distribution business, which comprises 360 MW of power across 600 sites. The transaction also includes an additional 700 MW of generation currently under construction. This adds to its previous acquisition of Shepherds Flat wind farm in Oregon and international projects like the one in Brazil.

Finally, I can’t write about a company being an excellent growth stock and not discuss it’s performance over the past few years. Since the start of 2019, Brookfield Renewable stock has gained 211%. This represents a growth of 69.5% on an annual basis. A $10,000 investment at that time would be worth more than $31,000 today. This compares to a 25.9% growth by the TSX over the same period.

Renewable energies will continue to grow over the next decade. Brookfield Renewable estimates that the industry will require investments of about $100 trillion over the next three decades to see the kind of change it hopes to see. Fortunately, global powerhouses are doing their part to see that plan through. Joe Biden has stated his intentions to invest US$400 billion into clean energy over the next decade. With backing like that, in the industry, and a firm leadership position by Brookfield Renewable, it’s hard to see this company do anything but grow.

Foolish takeaway

Brookfield Renewable is an excellent company to hold in your portfolio. This stock is an excellent pick in term of both a dividend company and a growth stock. Brookfield Renewable is a top choice in my portfolio, and I plan to pick up more shares in the very near future. If you don’t already hold this company, consider taking another look.

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 owns shares of Brookfield Renewable Partners.

More on Investing

A cannabis plant grows.
Cannabis Stocks

Canopy Growth Stock Is Rising But I’m Worried About This One Thing

Canopy Growth stock is soaring as the legalization effort makes real progress in both Germany and the United States.

Read more »

young woman celebrating a victory while working with mobile phone in the office
Investing

3 Roaring Stocks to Hold for the Next 20 Years

These top TSX stocks are excellent long-term buys, given their multi-year growth potential and solid underlying businesses.

Read more »

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

grow dividends
Investing

Here’s My Top 3 TSX Stocks to Buy Right Now

Even though the TSX has been rising, there are still some good bargains out there. Here are three top compounding…

Read more »

Target. Stand out from the crowd
Investing

Prediction: This Canadian Growth Stock Could Double by 2030

Alimentation Couche-Tard (TSX:ATD) is a top growth stock that could do well over the next six or so years.

Read more »

Businessman holding AI cloud
Tech Stocks

Could Investing $20,000 in Nvidia Make You a Millionaire?

Nvidia stock has made investors millionaires in the last 10 years. Is it too late to invest to become a…

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

money cash dividends
Stocks for Beginners

Have $500? 3 Absurdly Cheap Stocks Long-Term Investors Should Buy Right Now

If you're looking for cheap stocks, these three have a huge future ahead of them, all while costing far less…

Read more »