1 Renewable Energy Stock to Buy and Hold

Here’s why Brookfield Renewable Partners (TSX:BEP.UN) could be a top renewable energy stock for investors to consider right now.

| More on:
Aerial view of a wind farm

Source: Getty Images

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.

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.

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 Chris MacDonald 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

Energy Stocks

Grab This 7.3% Dividend Yield Before It’s Gone!

Before chasing high yields, investors should take a step back to examine the dividend safety, downside risk, and total returns…

Read more »

TFSA and coins
Dividend Stocks

Beyond Basic: Turn That TFSA Into a Gold Mine With $7,000

Basic materials are anything but basic. These are the back bone of every economy, and should be the back bone…

Read more »

Pipeline
Energy Stocks

Invest $7,000 in This Dividend Stock for $464 in Passive Income

This high yield TSX stock could help generate steady passive income.

Read more »

oil and natural gas
Energy Stocks

2 Canadian Energy Stocks to Buy Hand Over Fist in September

Don’t miss your chance to load up on these two beaten-down energy stocks at these heavily discounted prices.

Read more »

Hand writing Time for Action concept with red marker on transparent wipe board.
Energy Stocks

Is It Too Late to Buy Fortis Stock Now?

Here's why Fortis (TSX:FTS) is a top utilities stock I think long-term dividend investors should consider, even at current levels.

Read more »

Money growing in soil , Business success concept.
Energy Stocks

TSX Domination: The 4.1% Dividend Stock Canadian Investors Should Watch

Canadian investors should seriously consider owning a top-tier energy stock and earn in two ways.

Read more »

Dam of hydroelectric power plant in Canadian Rockies
Energy Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock (TSX:ENB) has long been one of the best dividend payers out there. But, perhaps it might be time…

Read more »

sad concerned deep in thought
Energy Stocks

CES Energy Stock Is Rising, But I’m Worried About 1 Thing

Despite a potential short-term challenge, CES Energy’s (TSX:CEU) long-term growth outlook remains strong, which could make it an attractive buy…

Read more »