Brookfield Renewable Partners (TSX:BEP.UN) has remained volatile over the last year, but investors are starting to take notice again. After posting strong financial results recently, its stock surged over 6% in a single day on January 31, reflecting renewed confidence in its long-term potential. However, despite this recent jump, BEP.UN remains down 9.4% over the last 12 months, now trading at $30.96 per share with a market cap of $8.8 billion.
For income-focused investors, one key attraction is Brookfield Renewable’s impressive 7.1% dividend yield, which could offer a steady income even in uncertain market conditions. But is this high yield sustainable, and does the stock offer strong upside potential beyond its dividends?
In this article, let’s take a closer look at Brookfield Renewable’s latest financial results and growth outlook to find out whether its 7.1% yield makes it a smart buy today.
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Brookfield Renewable’s record results
That brings us to Brookfield Renewable’s latest financial growth trends, which continue to show strength despite macroeconomic concerns. In the full year 2024, the company just posted record-breaking results, with its funds from operations (FFO) rising 10% per unit year over year to reach $1.2 billion.
Even in the fourth quarter alone, its FFO jumped 21% from a year ago to US$0.46 per share, clearly reflecting the underlying strength of its business model. While net income figures took a hit due to non-cash expenses, its long-term growth outlook still looks solid due to its inflation-linked cash flows, focus on quality acquisitions, and high-return asset sales.
What’s hurting Brookfield Renewable’s stock performance?
Well, the demand for clean energy has never been higher. Big corporate players, especially those investing in artificial intelligence (AI)-driven data centres and electrification, are scrambling to secure renewable power. Recently, Brookfield Renewable benefited from this trend by securing contracts for an additional 19,000-gigawatt hour of power generation, including a landmark deal with Microsoft.
In addition, it’s been aggressively recycling capital by selling off de-risked assets at double its return targets, which brought in US$2.8 billion in fresh funds. But despite these solid moves, Brookfield’s stock, like much of the renewable energy sector, has remained under pressure in recent months due partly to concerns over potential policy shifts by the new U.S. administration.
Is Brookfield Renewable stock a buy for its over 7% dividend yield?
Now, if you’re wondering whether this stock is a smart buy, the long-term picture looks promising to me. Interestingly, Brookfield isn’t relying on its current assets to drive future growth; instead, it’s actively expanding its capacity and asset base.
The company is developing about 7,000 megawatts (MW) of new capacity, with plans to ramp that up to 10,000 MW annually by 2027. It also just used a record US$12.5 billion for new investments, including for buying stakes in Infinium, Orsted, and Neoen, which will expand its global footprint. Given these robust fundamentals, for long-term investors looking for a mix of dividend income and long-term capital appreciation, Brookfield Renewable stock certainly checks all the right boxes, in my opinion.
