Where Will Brookfield Renewable Stock Be in 3 Years?

With the world going green, but a shift in politics in the United States, where does that leave a company like BEP stock in the next three years?

Amy Legate-Wolfe

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. Before joining Motley Fool Canada, she 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. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published December 19, 2024 3:30 pm EST

| More on: BEP.UN

Brookfield Renewable Partners (TSX:BEP.UN) is riding the wave of the global green energy transition, solidifying its position as a leader in renewable infrastructure. With a strong mix of hydroelectric, wind, solar, and energy storage assets, the company’s diversified portfolio is well-positioned to capitalize on the growing demand for cleaner energy. However, challenges remain, including shifting political dynamics and an evolving market. As we look three years ahead, BEP stock’s trajectory will likely be shaped by its ability to adapt, innovate, and leverage its robust financial position.

An investor uses a tablet — Source: Getty Images

The good news

In the third quarter of 2024, BEP stock delivered record funds from operations thanks to strategic acquisitions, effective asset management, and favourable pricing. Yet, it wasn’t all smooth sailing. The company posted an earnings per share (EPS) down $0.32, falling short of expectations. Despite this, analysts remain bullish on BEP stock, projecting a potential 34% upside to a target price of US$31.78. With a forward annual dividend yield of 5.87%, BEP stock remains an attractive option for income-focused investors.

Interestingly, BEP stock’s future could be influenced by broader societal trends like the rise of electric vehicles (EVs). A recent survey from Capital One Canada found that 53% of Canadians are more inclined to consider an EV due to rising gas prices. While hybrids remain the top choice for many (42%), the growing shift towards greener transportation aligns with BEP stock’s renewable energy initiatives, particularly in powering EV infrastructure.

The financial landscape for EV adoption also supports BEP’s growth narrative. Charging costs for EVs in Ontario and British Columbia are significantly lower than gas expenses, highlighting the economic benefits of renewable energy. With EV charging station usage tripling across Canada from 2022 to 2024, BEP stock has a clear opportunity to integrate renewables into EV charging solutions, thus tapping into a rapidly growing market.

On the financial front, BEP stock boasts a solid asset base, with total assets nearing $995 billion as of mid-2024. The company recently issued subordinated notes to bolster its capital structure, enabling further investments in renewable projects. This strategic move underscores BEP stock’s commitment to long-term growth and its ability to navigate a competitive sector.

The bad news

The return of Donald Trump to the U.S. presidency could pose challenges for the renewable energy sector, as his previous administration favoured fossil fuels. However, BEP stock’s global presence and the strong international push for clean energy may help it weather any domestic policy shifts. The renewable sector’s momentum worldwide suggests that BEP is likely to continue benefiting from favourable market dynamics.

BEP stock’s acquisition strategy is another key driver of its future prospects. The $6.54 billion purchase of France’s renewable energy developer Neoen highlights its aggressive approach to expanding its global footprint. These strategic investments not only enhance BEP stock’s revenue streams. These also strengthen its operational capabilities, positioning it for long-term success.

One area where BEP stock could significantly impact is EV infrastructure. While over 60% of EV owners report accessible charging stations, long wait times for public chargers remain a major pain point. With its expertise in renewables, BEP stock could explore partnerships or investments in renewable-powered EV charging networks, addressing this gap and opening new revenue opportunities.

Yet until then, the next three years will depend on BEP stock’s ability to innovate and adapt to market demands. As the EV ecosystem expands and renewable energy adoption accelerates, the company is well-positioned to thrive. While political and market uncertainties remain, BEP’s strong financial health, commitment to expansion, and alignment with consumer trends suggest a promising outlook for investors.

Bottom line

By 2027, BEP stock could emerge not only as a leader in renewable energy. It could also be a key enabler of the EV revolution. With its combination of strategic investments, diversified portfolio, and focus on sustainable solutions, the company is poised to deliver strong returns for investors — all while driving the global transition to a cleaner, greener future.