Pembina Vs. Brookfield Renewable: Which High-Yield Dividend Stock Is Better?

Both Pembina Pipeline (TSX:PPL) and Brookfield Renewable Partners (TSX:BEP.UN) look like strong dividend stocks, but is one better?

Amy Legate-Wolfe

Author Bio

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband.

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Published July 24, 2024 9:30 pm EDT

In the ever-evolving landscape of energy investments, dividend stocks remain a popular choice for long-term investors seeking stable income. In the Canadian market, Pembina Pipeline (TSX: PPL) and Brookfield Renewable Partners (TSX: BEP.UN) are two prominent energy dividend stocks. Today, let’s get into them both, deciphering which stock might be a better long-term investment.

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Pembina Pipeline

Pembina Pipeline reported robust earnings for the fourth quarter (Q4) of 2023, with $698 million in earnings and a record annual adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $3.82 billion. Despite a slight miss in Q1 2024, the company remains financially strong, demonstrating consistent revenue and earnings growth.

Pembina’s growth is driven by increased pipeline volumes, new contracts, and strategic acquisitions such as interests in Alliance and Aux Sable for $3.1 billion. Key projects like the Dallas path-to-zero initiative and the Nipisi pipeline further bolster its growth outlook.

The company is also known for its consistent dividend payouts, supported by its solid financial performance and strategic growth initiatives. This reliability makes it attractive for income-focused investors with a 5.7% dividend yield.

However, there are a few things to consider. Challenges include higher-than-expected capital costs for the Cedar LNG project and potential frac constraints. Even so, Pembina’s strategic focus on new projects and acquisitions helps mitigate these risks.

Brookfield Renewable Partners

So, let’s look at Brookfield Renewable as a comparison. The company reported revenue growth to $875 million in Q1 2024 but missed earnings estimates with an earnings per share of -$0.23. Despite this, the revenue increase reflects its expanding renewable energy portfolio.

Brookfield Renewable is positioned well in the renewable energy sector, with significant investments in solar, wind, and battery storage technologies. Strategic acquisitions, like Neoen, enhance its growth potential and market position. Plus, it offers partnerships with several other established companies.

Brookfield Renewable offers a competitive dividend yield, supported by stable cash flows from its diversified renewable energy assets. The company’s commitment to sustainability and expanding projects adds to its long-term appeal. So, that dividend yield of 5.7% looks stable.

However, the primary risk is the recent earnings performance, with consistent misses against analyst estimates. Even so, the long-term growth potential in the renewable energy sector and strategic acquisitions provide a solid foundation for future performance.

Bottom line

Both Pembina Pipeline and Brookfield Renewable Partners offer attractive opportunities for long-term investors. Pembina Pipeline is ideal for those seeking stability and reliable dividends backed by strong financial performance and strategic growth in the energy sector. Meanwhile, Brookfield Renewable Partners appeals to investors focused on growth and sustainability, leveraging its expanding renewable energy portfolio and strategic acquisitions.

Ultimately, the choice depends on individual investment goals and risk tolerance. Pembina offers more immediate financial stability and dividend reliability, while Brookfield Renewable provides long-term growth potential in the renewable energy market. Either way, both look like strong dividend stocks on the TSX today.