Brookfield Renewable Partners (TSX: BEP.UN) looked as if it were going to be one of the greatest performers back in 2021. Shares skyrocketed to around $70 per share when President Joe Biden came to office. However, by February, Brookfield Renewable stock started to drop, as the market took a turn.
This last year has been a difficult one for the company. Higher inflation and interest rates meant higher costs, and this hit the company’s earnings. Even so, shares were up 20% for 2023 — until last week, when there was a significant drop of 7%.
What happened?
Despite posting strong earnings, it seems that investors were hoping Brookfield stock would hold onto its cash rather than spending it. Hence the drop after Brookfield Renewable stock announced it would be purchasing Duke Energy Renewables. The cost came in at around US$2.8 billion, but that wasn’t even the reason shares dropped.
The funding was to come out of a $650 million equity offering for Brookfield Renewable stock. However, shares were priced at just $33.80, which, even now, is far lower than the $39 where it trades now.
Yet the plunge in Brookfield Renewable stock is still lower than it has been in quite some time, with shares down 11% in the last year, even with a recovery in 2023. So, the question is, what should investors do now?
Weakness for now
There continues to be weakness in the green energy sector, with Brookfield Renewable stock included. There is going to continue being high costs associated with starting up renewable energy, both for Brookfield and for countries wanting their own power sources around the world.
Yet because of this, that might mean this is exactly when investors should consider the stock. Green energy stocks are down, providing a solid long-term opportunity. The world is shifting to clean energy, and Brookfield Renewable stock remains one of the largest renewable energy producers both in the United States and around the world.
The company continues to have a diversified portfolio that includes everything from wind and solar power to uranium solutions across the globe. And while investors may not be happy with the recent acquisition, it’s a part of the growing plan.
Brookfield Renewable stock plans to invest US$6 billion to US$7 billion in new projects over the next five years. It’s already done about US$1 billion of this so far in 2023. Yet with an excellent credit position, it’s likely to continue doing this throughout the year — especially as the area remains so cheap.
Bottom line
Buy now for later. That’s the best plan for Brookfield Renewables stock. It’s likely to climb back in the near future and currently offers a dividend yield at 4.61% for investors to consider as well. So, with a growing market, you could definitely do worse than considering one of the largest renewable power producers on the planet. And should shares return to 52-week highs, the stock could provide today’s investor with a potential upside of 36% as of writing. That’s not too bad.
