Better Buy in February 2024: Brookfield Renewable Partners Stock vs. TC Energy Stock

Brookfield Renewable Partners (TSX:BEP.UN) is a quality energy company. Could TD Energy (TSX:TRP) be even better?

| More on:
An engineer works at a hydroelectric power station, which creates renewable energy.

Source: Getty Images

Brookfield Renewable Partners (TSX:BEP.UN) and TC Energy (TSX:TRP) are two of Canada’s most important energy companies. BEP is a renewable energy company that invests in solar, wind, and hydro projects. TC Energy is a diversified energy company involved in pipelines, power, and storage. The two companies seem very different on the surface, but when you think about it, they’re both basically in the business of supplying power. The difference is that one is involved in “green energy” while the other is a more conventional fossil fuels company. Therefore, these companies represent two completely different takes on the future of power. In this article, I will explore both of these stocks side by side so you can decide which one is right for you.

The case for Brookfield Renewable Partners

One big advantage that Brookfield Renewable Partners has over TC Energy is the fact that its assets are more “future proof.” Whereas TC Energy operates oil and gas assets that are on the receiving end of climate change regulations and taxes, Brookfield Renewable operates assets that in many cases enjoy tax-favoured status. Some of the company’s biggest segments include:

  • Hydroelectric: $1.5 billion in revenue, $626 million in funds from operations (both figures for the 12-month period)
  • Wind: $511 million in revenue, $382 million in funds from operations
  • Storage and other: $241 million in revenue, $133 million in funds from operations

As you can see, all of BEP’s major segments were FFO-profitable over the last 12 months. For the most part, revenue and earnings were down from 2022 levels last year, but that’s to be expected with the large increase in interest rates that occurred in 2022 and early 2023. If inflation keeps trending downward, then interest rates will likely start to trend downward too, and that will help Brookfield Renewable on the earnings front.

The case for TC Energy

The main advantage that TC Energy has over Brookfield Renewable is the fact that it has a more established and proven business model. TC Energy is mainly involved in storing and transporting oil and gas. It also owns power generating facilities that supply local utility companies. Midstream energy and utilities are both very well established business models. Utilities in general are protected from competition, too.

Unfortunately, TC Energy’s most recent results were not very good. In the third quarter, the company delivered:

  • A $0.19 per share loss.
  • A $1 billion decline in net income (which swung from a positive sum in the base period to a negative one last quarter).
  • A $799 million loss from Canadian liquids pipelines.
  • A very slight increase in cash flow from operations.
  • A 3.33% dividend increase.

There were some good metrics in there, namely cash from operations and the dividend. On the whole, though, there were many red flags in the release too – chiefly the large decline in net income.

The final verdict

Taking everything into account, I’d rather invest in Brookfield Renewables than TC Energy. Although Brookfield’s earnings trended very slightly downward last year, the company’s long-term growth and expansion speak for themselves. Brookfield Renewables is backed by one of the most successful teams of capital allocators in the world. I don’t own any BEP, but I own related stocks that are performing well for me. I’d feel comfortable holding BEP, too.

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 Andrew Button has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.

More on Energy Stocks

oil and gas pipeline
Energy Stocks

3 Reasons to Buy TC Energy Stock Hand Over Fist After its Q4 Earnings Event

These top reasons make TRP stock worth considering after its fourth-quarter earnings event.

Read more »

edit Balloon shaped as a heart
Energy Stocks

Sweet Returns: 2 No-Brainer Oil & Gas E&P Stocks to Buy With $200 Right Now

Two oil & gas E&P stocks are no-brainer buys for their strong fundamentals and high-growth potential.

Read more »

energy industry
Energy Stocks

Better Buy: Suncor Stock vs. Exxon Mobil

Oil giants such as Exxon Mobil and Suncor offer investors a tasty dividend yield today. But which energy stock is…

Read more »

Pipeline
Energy Stocks

Down 3.5%: Is Now the Right Time to Buy Enbridge Stock?

A Canadian energy giant remains a first-choice investment right now, despite the weak start in 2024.

Read more »

Mature financial advisor showing report to young couple for their investment
Energy Stocks

New Study Shows 36% of Couples Hide Spending From Partner, And It’s a Pressure Point

Having the hard talk? It can literally pay to do so. Here's how to stop holding out on your partner…

Read more »

Group of industrial workers in a refinery - oil processing equipment and machinery
Energy Stocks

2 Energy Stocks to Buy Hand Over Fist in February

Here are two of the best Canadian energy stocks you can buy in February 2024.

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Energy Stocks

2 Growth Stocks That Could Skyrocket in 2024

Are you looking to add some growth to your investment portfolio this year? Here are two top growth stocks to…

Read more »

Utility, wind power
Energy Stocks

Is Brookfield Renewable Partners Stock a Buy Now?

Brookfield Renewable Partners continues to generate solid earnings, distribute higher dividends, and deliver above average capital gains.

Read more »