Last week, I wrote an article covering one stock that was potentially set to make a fortune from Canada’s data centre buildout. The stock was Brookfield Corp (TSX: BN), and my main reason for believing it had the potential to make money from Canada’s data centre buildout was because it had two subsidiaries directly involved in building and fuelling data centres: Brookfield Infrastructure Partners (TSX: BIP.UN) and Brookfield Renewable Partners (TSX: BEP.UN). BIP.UN invests in data centres, and BEP.UN makes billions fuelling them. Brookfield Corp owns substantial portions of both of those companies, so it seemed like a logical choice for a company set to make money off of Canada’s data centre buildout.
Now, before going any further, I should explain the situation involving data centres in Canada. Canada currently has about 337 data centres, giving it the fifth highest overall data centre density in the world. However, most estimates state that Canada only has between 5 and 30 of the “hyper-scale” data centres invoking the term “data centre” in today’s AI-centric discourse.
The Data Centre Buildout
That’s about to change. There are currently plans underway to build an additional 96 data centres in Canada. Many of these are reported to be true, hyper-scale AI data centres. At least one of them is going to be built by Meta Platforms (NASDAQ: META), the exact type of company that comes to mind when we hear the word “data centre.”
So, Canada’s number of hyper-scale data centres is set to increase, and companies in the Brookfield universe are set to benefit from that. That was what I was thinking when I wrote my last article. However, after writing that article, a thought occurred to me: “Sure, Brookfield’s a great company, but if a reader is looking for ways to profit off of data centres directly, they could get a purer play with one of its subsidiaries.” So, in the ensuing paragraphs I’ll explain which of Brookfield’s daughter companies has the most to gain from Canada’s data centre buildout.
Source: Getty Images
Brookfield Renewable Partners
I think that Brookfield Renewable Partners is the Brookfield company most likely to profit off of Canada’s data centre buildout. Its exposure to data centres is more direct than that of its parent corp, and it’s already supplying power to hyperscale data centres in the States.
BEP.UN inked deals to supply power to Microsoft (NASDAQ: MSFT) and Alphabet (NASDAQ: GOOG) in recent years. This perfectly positioned Brookfield Renewable to supply power to Meta’s upcoming data centre as well as likely similar future projects by Microsoft and Google, in Canada. Brookfield’s Infrastructure subsidiary, on the other hand, seems to be targeting smaller clients. So, Brookfield Renewable Partners appears to be the best B-company to make money off the hyper-scale data centre buildout in Canada.
Brookfield Renewable’s historical results
Over the last 10 years, Brookfield Renewable has delivered a 226% total return, vs about 170% for the TSX. It has been a pretty good run. Don’t pay attention to the stock chart: most of the returns have come from dividends. Now, past results don’t always predict future results, but this company’s growth catalysts are clear. I think it’s quite possible that BEP.UN will continue paying nice big dividends for the foreseeable future.
