Brookfield Renewable Partners (TSX:BEP.UN) has long been considered a blue-chip play in the renewable energy space — but lately, investors are asking: what’s going on with this underperforming stock?
Despite its impressive portfolio and consistent growth strategy, BEP.UN has lagged behind the broader Canadian stock market by a wide margin in recent years, raising questions about its role in investor portfolios.
A market laggard in a hot market
Since the Bank of Canada began its last interest rate hiking cycle in early 2022, BEP.UN has delivered a total return of approximately -5.4%, while iShares S&P/TSX 60 Index ETF — a benchmark for the Canadian market — has returned a stunning 55.7%.
Even when compared to its clean energy peers, BEP.UN hasn’t exactly shone — but it’s done better than most. Over the same period, three major clean energy exchange-traded funds (ETFs) — iShares Global Clean Energy Index ETF, Harvest Clean Energy ETF, and BMO Clean Energy Index ETF — posted an average return of -13.8%. So, while BEP.UN hasn’t kept pace with the broader market, it remains one of the more resilient names in its sector.
After the Bank of Canada began cutting rates in mid-2024, sentiment toward renewables improved slightly. The average return from those clean energy ETFs turned positive at 3.1%, while BEP.UN was flat — and the Canadian market surged 38%. That divergence raises eyebrows: is BEP.UN still worth holding?
A strong business behind the stock
Despite market underperformance, Brookfield Renewable’s operations continue to grow. The company owns and operates a massive 43,300 MW of renewable and transition assets spread across five continents, diversified across hydro (19%), wind (39%), utility-scale solar (27%), and distributed energy and storage (15%).
Its development pipeline of 180,500 MW is heavily weighted toward solar (71%) and onshore wind (23%), pointing to long-term demand for clean energy infrastructure. Its assets are not just large — they’re high quality. About 70% of its revenues are indexed to inflation, and 90% are contracted with long-term agreements averaging 14 years.
The company’s financials are solid. Brookfield Renewable boasts a BBB+ investment-grade balance sheet, with 97% of its debt at fixed rates, averaging 12 years to maturity. This structure helps shield the business from short-term interest rate volatility.
In the first half of 2025, Brookfield reported 8.0% FFO (funds from operations) growth, with FFO per unit up 8.3% to US$1.04. Its FFO payout ratio sits at an acceptable 72%, supporting its cash distributions.
A long-term play for income investors
At under $36 per unit, BEP.UN offers a compelling 5.7% cash distribution yield. Analysts currently see the stock trading at a 12% discount, implying potential near-term upside of around 14%. More importantly for long-term investors, the company has raised its payout consistently for 15 years, with a compound growth rate of 6.1%.
Looking ahead, management expects to grow FFO enough to support 5-9% annual distribution increases, keeping BEP.UN is attractive for income-focused investors.
Investor takeaway
Brookfield Renewable Partners may not be exciting on the charts right now, but the business remains fundamentally strong. For long-term investors — especially those seeking income and exposure to renewable infrastructure — buying on weakness could prove a smart move as the energy transition continues to unfold.
