There is a difference between millionaire-maker stocks and stocks that can make you a millionaire if you buy them and exit at the right time. In the later stocks, you are essentially capitalizing on a growth phase, which may be fueled by a wide range of factors, and the stock’s fundamental strengths would be just one of those factors.
Other factors also come into play, particularly the amount of capital you are planning on investing, how consistently the stock grows, and how long you are planning on holding it. With these conditions in mind, it may become easier to identify whether Brookfield Renewable Partners (TSX:BEP.UN) is a millionaire-maker stock.
Brookfield Renewable has one of the largest portfolios of renewable energy assets in the world; it has 166,000 megawatt capacity, though most of it is currently in the development phase. It includes hydropower as well, but the bulk of the power generation capacity is in solar and wind projects.
This makes it an amazing pick from an ESG (environmental, social, and governance) investing perspective. The assets are geographically well-diversified (30 markets in 20 countries), which may provide the company with a wider range of growth opportunities compared to local renewable energy companies.
The current cash flows lean heavily towards hydropower since those represent the largest slice of the power generation that’s currently operational, but it may change in the future. The company also has access to a significant amount of liquidity, which makes acquisitions relatively easier.
Right now, the company is a modest grower at best. It returned about 70% in the last five years and about 129% in the last 10 years through price appreciation, which places the annualized growth somewhere between 13% and 14%. But if we include the dividends, the overall returns for the last 10 years become 277%, which is quite attractive.
But is it enough to classify the stock as a millionaire maker? Only if you are planning on investing a significant amount of capital in the company (around $100,000) and holding it for roughly three decades.
It may seem like a lot of money is going into one company, but you don’t have to do it all at once. You can invest smaller sums in the company whenever there is a bear market or the stock is discounted for another reason. This way, you may make up for whatever compounding opportunity you lose in the form of recovery-fueled growth and by capturing high yield.
There is another factor that may accelerate the stock’s growth pace — i.e., the demand for renewable energy going up.
We may also see its cash flow improve once more of its development projects start coming online. These factors can trigger a new, more accelerated growth phase for the stock, which may make it a millionaire-maker with more reasonable capital and holding period requirements.
Even if you are not working with enough capital for this stock to make you a million dollars in a reasonable time frame, assuming it keeps or improves its return potential, it’s still worth considering. The dividends are generous enough, and the modest growth potential is enough to build a sizable nest egg.