For investors seeking long-term upside in the renewable energy space, Brookfield Renewable Partners (TSX: BEP.UN) is certainly worth a look. This top renewable energy stock is a relatively stable player in what could be a sector with incredible growth potential over the long term.
The company’s focus on becoming a premier owner and operator of key wind, hydroelectric, solar, and storage facilities across America, Europe, and Asia has led to remarkable growth over the past 10 years. And while this stock has traded relatively flat over more recent one-year and five-year time horizons, the reality is that the long-term secular tailwinds underpinning this stock appear to remain in place.
Here’s why I think Brookfield Renewable is a top option for dividend investors in the renewable energy sector moving forward.
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A strong source of income
I think Brookfield Renewables’ allure mostly comes in the form of the company’s dividend yield. Currently yielding more than 5.7% at the time of writing, Brookfield renewable has raised its dividend payout at an average rate of 6% in recent years. That’s a testament to the company’s expectation of profitability long term, and its ability to generate strong cash flows over time.
Notably, the company’s yield has come down relative to its stock price due to its rise over the past decade. But assuming the company’s funds from operations rise at a rate of around 10% per year, this company’s dividend growth profile looks to be reasonable.
Organic growth drivers are expected to deliver between 7% and 12% annualized FFO growth on a moving forward basis through 2028. Accordingly, from a fundamentals standpoint, I think there’s a lot to like about how this stock is positioned right now.
Why buy and hold this renewable energy stock?
Brookfield’s underlying fundamentals, when combined with its recent partnerships (such as that of the company’s Cameco/Westinghouse deal) should drive revenue and margin expansion over time. As more companies look to partner with Brookfield Renewables on providing clean power solutions in a bid to meet greenhouse energy emissions targets, this is a company that could have much more powerful free cash flow growth upside than the market is pricing in.
The company is truly one of the few global publicly traded renewable energy stocks that’s worth considering right now, in my view. This is a sector that can be volatile, so losses could be seen over certain timeframes. But for now, I think this stock is worth locking in at its current yield and riding higher over the long term. Until something drastically changes, I’m bullish on Brookfield Renewables’ long-term prospects.
