Canadian retirees should consider supplementing their retirement benefits with passive income from blue-chip dividend stocks. The ideal dividend stock offers shareholders a tasty dividend yield and the potential to generate additional returns via capital gains. Moreover, the best dividend stocks should be positioned to derive cash flows across business cycles and increase these payouts over time.
Valued at a market cap of US$19.4 billion, Brookfield Renewable Partners (TSX: BEP.UN) is an overlooked dividend giant that should be part of your retirement portfolio in 2025. Down 20% from all-time highs, the TSX dividend stock offers you a forward yield of over 5%.
Despite the ongoing pullback, BEP stock has returned 275% to shareholders over the past decade, after adjusting for dividend reinvestments.
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Is this TSX dividend stock a good buy?
Brookfield Renewable Partners delivered strong second-quarter results with funds from operations (FFO) per unit climbing 10% year over year, positioning the company to meet its full-year growth target.
The renewable energy giant commissioned 2.1 gigawatts of new capacity during the quarter and expects to bring approximately eight gigawatts online in 2025, which would set a company record.
The quarter’s standout development came through a groundbreaking framework agreement with Google to deliver up to three gigawatts of hydroelectric capacity across the United States.
This follows last year’s landmark deal with Microsoft for over 10.5 gigawatts of renewable energy capacity, cementing Brookfield’s position as the energy solutions partner of choice for global tech companies.
BEP has already secured the first two contracts under the Google framework, totalling 670 megawatts of capacity from Pennsylvania facilities, with 20-year terms at attractive pricing.
Management emphasized that hyperscalers are expanding their power procurement strategies beyond traditional wind and solar to include hydro and nuclear generation at scale.
This shift addresses growing concerns about grid reliability amid surging energy demand, driven by the expansion of artificial intelligence and cloud computing. Brookfield’s diversified portfolio across hydro, wind, solar, nuclear, and battery storage positions it uniquely to meet these evolving customer needs.
BEP’s Westinghouse nuclear services business is poised to gain traction in the upcoming decade. Westinghouse services approximately two-thirds of the world’s nuclear power fleet and underlies half of the operating reactors globally.
Recent U.S. executive orders aim to build 10 gigawatts of large-scale nuclear reactors by 2030, positioning Westinghouse as a primary beneficiary given its advanced utility-scale reactor technology.
Brookfield continues to execute its asset recycling strategy, selling assets for expected proceeds of approximately US$1.5 billion since the start of the second quarter, with US$400 million net to Brookfield Renewable at strong returns.
Management expects total asset sales proceeds in 2025 to exceed last year’s levels while maintaining returns at or above targets. With a 230-gigawatt development pipeline and robust demand fundamentals, Brookfield’s growth story is far from over.
Is BEP stock undervalued?
Brookfield Renewable Partners has raised its annual dividend from US$0.95 per share in 2016 to US$1.42 per share in 2024, indicating an annual growth rate of 5.2%.
Analysts tracking Brookfield Renewable stock forecast its adjusted funds from operations to expand from US$1.69 per share in 2024 to US$2.25 per share in 2027. In this period, it is projected to increase dividends per share from US$1.42 to US$1.62. It suggests that Brookfield Renewable’s payout ratio will improve from 84% in 2024 to 72% in 2027.
Brookfield Renewable stock is priced at 18 times trailing earnings, which is reasonable. If it trades at a similar multiple, it could gain 30% over the next two years. After adjusting for dividends, cumulative returns could be closer to 40%.
