Canadian investors should consider maximizing their annual TFSA (Tax-Free Savings Account) contributions, given this registered account’s tax-sheltered status. In 2025, the TFSA contribution limit increased to $7,000, bringing the cumulative contribution room to $102,000.
Any returns earned in the TFSA, including capital gains and dividends, are exempt from Canada Revenue Agency taxes. So, it makes sense to buy and hold quality dividend stocks in this account to benefit from outsized gains over time.
One such TSX dividend stock is Brookfield Renewable Partners (TSX: BEP.UN). Valued at a market cap of $21.1 billion, the clean energy company owns a portfolio of renewable power generating facilities in the Americas, Europe, and Asia. It generates electricity through hydroelectric, wind, solar, distributed generation, pumped storage, and more.
Brookfield Renewable went public in late 2000 and has since returned 465% to shareholders. However, if we account for dividend reinvestments, cumulative returns are much higher at 3,190%, easily outpacing the broader markets.
Despite these market-thumping gains, the TSX stock trades 47% below all-time highs, allowing you to buy the dip. Moreover, it offers shareholders a tasty dividend yield of 6.4%. Let’s see why I remain bullish on this BEP stock right now.
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Should you own the TSX stock in a TFSA?
Brookfield Renewable reported its strongest operating and financial results ever in 2024. The renewable energy giant capitalized on surging electricity demand from artificial intelligence (AI) and data centre growth while expanding its global footprint through strategic acquisitions.
It deployed US$12.5 billion (US$1.8 billion net to Brookfield Renewable) into new investments last year, including stakes in Neoen and Ørsted’s U.K. offshore wind assets. Brookfield also generated record proceeds of US$2.8 billion from asset sales.
“The outlook for our business is better than ever,” Chief Executive Officer Connor Teskey told investors. “We’re experiencing a dramatic shift driven by the AI revolution, one of the most significant advancements in technology in our lifetime. This is driving demand for our product, which has never been higher.”
In 2024, Brookfield reported funds from operations (FFO) of US$1.2 billion, or US$1.83 per unit, representing 10% growth over the previous year. Based on these results, Brookfield Renewable announced a 5% increase to its annual distribution to US$1.492 per unit, marking its 14th consecutive year of distribution growth.
The renewable energy provider is positioning itself as a key beneficiary of accelerating power demand from tech companies, which increased their infrastructure investments by 50% in 2024. Last year, the company signed contracts to deliver over 100,000 gigawatt hours of generation to commercial and industrial customers, including a major framework agreement with Microsoft.
“Investment by these firms grew 50% year over year in 2024, and it is expected that this will continue to increase tremendously throughout the rest of the decade,” Teskey noted.
Brookfield Renewable continues to grow
Brookfield Renewable’s stock has faced pressure amid broader weakness in renewable energy shares, given higher interest rates and the uncertainty around U.S. energy policy changes. However, it remains focused on long-term value creation through a development pipeline of approximately 200,000 megawatts.
The company commissioned about 7,000 megawatts of new renewable energy capacity in 2024 and aims to reach a 10,000-megawatt annual development run rate by 2027. It also strengthened its balance sheet, completing nearly US$27 billion in financings and ending the year with over US$4.3 billion in corporate liquidity.
In 2025, Brookfield Renewable expects to accelerate its asset recycling program, which has generated nearly US$6 billion in proceeds since 2020 at an average return of 22%. Recent successful exits include the sale of Saeta, which delivered three times the invested capital.
Analysts remain bullish on Brookfield Renewable stock and expect it to gain 16% over the next 12 months. After adjusting for dividends, cumulative returns may be closer to 23%.
