The ongoing pullback in share prices has increased the dividend yields of companies across sectors. Today, income-seeking investors can gain exposure to fundamentally strong dividend stocks and create a low-cost passive-income stream. In addition to regular dividend income, long-term investors should benefit from capital gains when investor sentiment improves.
Brookfield Renewable (TSX:BEP.UN) is a TSX dividend stock offering a forward yield of 6.7% in April 2025. Let’s see if you should own this clean energy giant at its current valuation.
Is this TSX dividend stock a buy right now?
Brookfield Renewable, one of the world’s largest renewable energy operators, plans to deploy between US$8 billion and US$9 billion in capital over the next five years as demand for clean energy surges.
The renewable energy powerhouse operates a massive portfolio of nearly 250,000 MW (megawatts) across hydro, wind, solar, distributed generation, and sustainable solutions. This includes 46,200 MW of operational capacity and an extensive 200,000 MW development pipeline.
“Growth opportunities for our business and sector are better than ever,” Brookfield states in its investor presentation. It cites dramatic increases in electricity demand driven by AI, data centers, and broader electrification trends. Notably, it expects global data centre power demand to increase 15-fold between 2022 and 2030.
Brookfield is positioning itself as the partner of choice for corporate decarbonization, highlighting its landmark framework agreement with Microsoft to deliver over 10.5 GW (gigawatts) of capacity between 2026 and 2030 in the U.S. and Europe. The company noted that over 80% of its newly contracted generation in 2024 was with corporate and industrial customers.
The TSX stock is fundamentally strong
With an investment-grade BBB+ balance sheet, 95% fixed-rate debt with an average 11-year maturity, and US$4.3 billion in available liquidity, Brookfield appears well-positioned to fund its ambitious growth plans.
Brookfield derives 90% of its revenues from contracted sources with an average 14-year term, and about 70% of revenues are indexed to inflation. About 75% of Brookfield’s funds from operations (FFO) come from North America and Europe, with the remainder primarily from South America and Asia Pacific. The company’s asset mix leans heavily toward hydro (47% of FFO), followed by onshore wind (21%), utility-scale solar (16%), distributed energy and storage (8%), and sustainable solutions (8%).
Brookfield is targeting +10% FFO per unit annual growth and 5-9% distribution growth. The current distribution is US$1.49 per unit, indicating a forward yield of 6.7%.
Analysts expect Brookfield to increase its adjusted FFO from US$1.69 per unit in 2024 to US$2.75 per unit in 2029. Comparatively, its dividend per share is forecast to grow to US$1.82 by 2029.
Bay Street estimates Brookfield’s dividend payout ratio will improve from 84% to 66% over the next five years, providing it with the flexibility to lower balance sheet debt and target accretive acquisitions.
Priced at 12.5 times trailing FFO, the TSX stock is cheap and trades at a discount of 38.4%, given consensus price targets. “We have a highly visible path to double-digit FFO growth and are extending our growth runway,” Brookfield stated, expressing confidence in delivering 12-15% total returns to investors as global energy transition trends accelerate.
