Brookfield Renewable Partners L.P. (TSX: BEP.UN) looks like one of those rare stocks that the market has mispriced. In fact, that still looks to be the case even after shares jumped 6% this week. The jump came as the U.S. government signed a deal to help build reactors with an investment of US$80 billion. On that short list of names? Brookfield.
The company sits at the crossroads of stability, global transformation, and massive growth funding, yet trades as if none of it matters. For investors with patience, BEP.UN could easily be one of the most undervalued opportunities on the TSX today, not just for income but for multi-year compounding.
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About BEP
Brookfield Renewable is one of the largest pure-play renewable power producers on the planet. It owns and operates a globally diversified portfolio of hydroelectric, wind, solar, and storage assets across North America, South America, Europe, and Asia. That portfolio represents over 33,000 megawatts of generating capacity and another 150,000 megawatts in development. It’s a scale no other Canadian clean-energy company can match, and few global peers can replicate. This size matters, because when governments and corporations decide to accelerate the energy transition, they turn to players with proven execution and balance sheet strength.
BEP’s second-quarter 2025 results underscored how much momentum is quietly building. Funds from operations rose 10% year over year to $371 million, driven by new project completions, strong hydroelectric output, and inflation-linked pricing built into long-term contracts. The net income loss fell from US$154 million to $112 million as global power prices remained elevated and new solar and storage assets came online. Management reaffirmed its target of 10% annual FFO growth over the next five years. Despite those fundamentals, BEP.UN trades at roughly 1.2 times sales.
Government money
What the market seems to be missing is how much tailwind the company now has from government policy, particularly in the United States. Under the Inflation Reduction Act (IRA), Brookfield stands to receive billions in direct incentives, production tax credits, and loan guarantees that effectively lower the cost of capital for renewable developers. In mid-2025, Brookfield announced it had secured commitments exceeding US$1.5 billion from U.S. government programs tied to clean-energy infrastructure. That’s even before today’s announcement.
Brookfield’s management team, led by Connor Teskey, is using that funding leverage to scale faster than ever before. Through power-purchase agreements with companies like Amazon, Microsoft, and Google, Brookfield is locking in 10- to 20-year contracts that guarantee predictable, inflation-protected cash flow. These deals tie the company directly to the digital economy’s next wave: data centres, artificial intelligence (AI) infrastructure, and cloud computing – all of which demand vast amounts of renewable power. When you combine long-term contracted revenue, inflation pass-through pricing, and subsidized capital costs, you get an earnings engine that’s both defensive and aggressively expanding.
Value and income
Financially, the stock’s weakness seems detached from its fundamentals. Units trade around $44, down about 30% from their 2021 highs. Debt remains manageable, with most borrowings fixed-rate and project-level, not at the corporate parent. The growth story also extends far beyond subsidies. Brookfield’s pipeline, already one of the largest in the world, positions it as a primary supplier of that demand. Every time a new data centre is announced or a government tightens carbon targets, Brookfield’s addressable market expands.
Dividend investors also have reason to pay attention. Brookfield has increased its payout for 14 consecutive years, compounding at roughly 6% annually, and management reiterated that 5% to 9% annual distribution growth is sustainable through at least 2030. The combination of a 5% current yield and high-single-digit annual growth gives investors potential total returns in the low- to mid-teens. Few income stocks offer that blend of reliability and upside.
Foolish takeaway
So why is the market overlooking it? In part, investors lump all renewables into one basket, assuming higher interest rates make the sector risky. But Brookfield is not a speculative developer; it’s a global operator with 75% of revenue tied to long-term inflation-linked contracts and with access to capital few competitors can match. Its cost of equity is dropping, not rising, as governments funnel incentives into the clean-energy buildout. With interest-rate cuts likely in 2026, those tailwinds could turn into a re-rating catalyst. Especially as yield-hungry investors return to dependable dividend names with visible growth.
