For years, I’ve been an investor in Brookfield Renewable Partners (TSX: BEP.UN). And it was going quite well! That is, until the market went south. My Brookfield stock is certainly not the great titan it once was. And all the promise about future renewable energy hasn’t helped it one bit.
Even so, there are at least three reasons why I’m still considering the energy stock on the TSX today.
Diversification
While there are other companies out there in the renewable energy sector focused on one energy source, I like Brookfield stock because of its diversification. The company is a merger and acquisition powerhouse, targeting 12-15% returns through both organic and acquisition growth. While the company has focused on hydro power in the past, over the last few years, there has been a shift with the power of wind and solar.
Yet while renewable energy production has been a large part of the stock, broader energy transition assets have as well. This includes investing in carbon-capture programs as well as traditional fossil fuel and nuclear power generation. What’s more, it invests on an ever-growing global scale. So, there is more diversification to come from Brookfield stock.
A big backing
One of the problems that investors have with Brookfield stock is that it’s investing all this capital in these future projects. That’s certainly troublesome in some cases, as the company needs to continue investing more and more high costs in future renewable assets. And nothing is certain as to whether these assets will make cash.
That’s why I’m also happy Brookfield stock is backed by parent company Brookfield Asset Management. Not only is BAM stock a huge corporation with money coming in from real estate assets around the world, but it’s invested in clean energy before — as in, over one hundred years before. It has the experience and expertise to know where and how to invest to create long-term assets investors can latch onto.
Value!
Then, of course, there’s the reason others avoid it in the first place! Brookfield stock is undervalued at this moment. Shares trade down 26% in the last year. This has produced a 6.31% dividend yield as of writing. It also trades at 1.19 times sales, 1.21 times book value, and boasts an 85% debt-to-equity ratio. This puts it in a strong, valuable position for investors looking for future growth.
Granted, there are certainly bound to be continuing problems with Brookfield stock in the near future. But honestly, I’m looking for the long term. That’s why I’ll continue to buy up the stock to gain more income as time goes on — not just through returns but the soaring dividend as well!
Bottom line
Brookfield stock has been good to me, and even though it’s down now, I don’t expect that to be forever — far from it. In the next few years, shares should rebound and soar back upwards once more. With a strong balance sheet, long-term projects and contracts, and a strong dividend, it’s one I’ll be picking up again and again.
