The stock market doesn’t always move the way we expect it to, and sometimes I’m glad it doesn’t. If every good business always traded at a premium, long-term investors like me would rarely get the chance to buy one after a meaningful pullback.
Currently, that description fits Brookfield Renewable Partners (TSX: BEP.UN). Its share price is still about 19% below its 52-week high, but when I look past the stock chart, I don’t see a business standing still. The company has been growing funds from operations, adding new power capacity, and investing heavily in its next generation of assets. It’s also moving deeper into areas such as battery storage that could become increasingly important as electricity systems evolve.
In this article, I’ll show why this top Canadian dividend stock looks attractive at current levels and could be worth holding for decades.
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Brookfield Renewable stock
To put it simply, Brookfield Renewable operates one of the world’s largest publicly traded renewable power and decarbonization platforms. Its operations include hydroelectric, wind, utility-scale solar, energy storage, and nuclear services.
After gaining about 24% over the last year, BEP.UN stock currently trades at $42.80 per share with a market cap of $12.8 billion. But the stock still sits roughly 19% below its 52-week high. At today’s price, Brookfield Renewable also offers a 5.1% annualized dividend yield.
Its recent share-price weakness makes this dividend-paying stock look even more attractive when compared with the company’s latest financial performance. In the second quarter, Brookfield Renewable posted record Funds From Operations (FFO) of US$421 million. That was up about 13% year-over-year (YoY).
The company’s hydroelectric business was a major contributor to that growth as the segment FFO jumped to US$336 million from US$205 million a year ago. Strong generation from its Canadian fleet, solid performance in Colombia, and gains from the sale of an interest in non-core U.S. hydro assets helped drive this improvement.
Its utility-scale solar segment also rose in its latest quarter, with FFO rising to US$116 million.
Why this dividend stock still has room to grow
More importantly, Brookfield Renewable’s expansion plans strengthen its long-term investment appeal.
Last quarter, the company committed or deployed about US$5 billion of capital. That included an agreement to acquire Aypa for roughly US$3 billion. Aypa owns roughly 3,000 megawatts of operating and under-construction battery storage assets, another roughly 3,500 megawatts of contracted projects, and a development pipeline of more than 20 gigawatts. I believe this could become an important long-term growth engine for Brookfield Renewable.
In addition, the company delivered about 1,280 megawatts of new capacity in the latest quarter as the business remains on track to deliver about 10,000 megawatts of new projects annually by 2027.
At the same time, its capital recycling strategy continues to free up cash for new acquisitions and growth opportunities.
These growth initiatives, coupled with its 5.1% dividend yield, record FFO, and a large global development pipeline make Brookfield Renewable an attractive Canadian dividend stock to buy, especially as it’s still nearly 19% below its 52-week high.
