The TSX has several high-quality dividend stocks, and Brookfield Renewable Partners (TSX:BEP.UN) is one among them. The renewable energy company has a strong track record of returning capital to shareholders through growing distributions. Moreover, its underlying business remains positioned to support further dividend growth over the long term.
While Brookfield Renewable is a reliable dividend payer, it could emerge as an unexpected beneficiary of the rapid expansion of artificial intelligence (AI)-powered data centres.
AI creating new demand source for Brookfield
The growth of AI is driving a surge in data centre buildouts. Data centre operators need reliable electricity at scale. As a result, the AI boom could create a new source of demand for renewable power developers capable of bringing large projects online quickly. That is where Brookfield Renewable has an advantage.
The company is one of the world’s largest developers of low-cost, fast-to-market solar and wind projects. Its renewable generation platform is complemented by a substantial hydroelectric portfolio that provides clean, dispatchable baseload power.
The company is also expanding its battery-storage operations, which present a significant growth opportunity as electricity consumption increases.
Together, these assets and long-term agreements with tech giants position Brookfield Renewable to benefit from the surge in electricity demand led by data centre expansion.
Brookfield Renewable is set to keep growing its payouts
Brookfield Renewable is well-positioned to benefit from rising electricity demand and increased investment in AI infrastructure. At the same time, its resilient business operating structure positions it well to keep rewarding its shareholders with higher distributions.
Brookfield Renewable generates most of its operating cash flows through power purchase agreements (PPAs). Moreover, about 90% of these contracts have an average remaining term of around 12 years, providing strong revenue visibility and supporting consistent cash generation.
Further, around 70% of Brookfield Renewable’s revenue is also linked to inflation, helping protect profitability as costs and prices rise.
Overall, strong electricity demand, long-term contracts, inflation-linked revenue, and a portfolio of high-quality assets provide a solid foundation for sustainable dividend growth. Brookfield Renewable stock also offers an attractive yield of more than 4.8%.
Brookfield Renewable to deliver solid total return
Brookfield Renewable is well-positioned to deliver solid total return. It is likely to pay and increase its distributions year after year. Moreover, it could deliver notable capital gains led by rising electricity demand. The company continues to benefit from favourable structural trends, including rising power consumption by AI-driven data centres, a focus on energy security, and the ongoing shift toward electrification. These trends are expected to support long-term demand for renewable energy, creating opportunities for Brookfield Renewable to grow earnings.
Capital recycling is another key competitive advantage. Brookfield Renewable brings contracted, cash-flow-generating infrastructure assets into operation when demand for such assets is strong. This enables the company to realize value from development and operational improvements while reallocating capital toward higher-return growth opportunities.
Brookfield Renewable expects annual FFO (funds from operations) growth of approximately 10%, providing a strong foundation for its targeted annual dividend growth of 5% to 9%. Overall, its resilient cash flows, visible revenue growth, and rising demand driven by data centre expansion position the company to generate solid total returns.
