Brookfield Renewable(NYSE: BEPC)(NYSE:BEP) is a rare investment opportunity. The leading global renewable energy producer offers investors strong earnings and growth. It currently yields around 4.5% (much higher than the S&P500‘S 1.5% dividend yield). Moreover, its profits are growing by double digits.
The dividend share sustainable energy is expected continue to grow vigorously. Combined with the attractive and growing dividend, Brookfield Renewable could produce powerful total return the coming years.
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Brookfield Renewable recently reported its third quarter results. The company generated $278 million, or $0.42 per share, in resources from operations (FFO), almost 11% increase compared to the same period last year. The company benefited from strong energy prices, recently completed development projects and successful acquisitions.
Brookfield’s historic hydroelectric fleet continues to generate strong results. The company sees healthy demand for it the beautiful power its hydroelectric power plants produce. This allowed it to sign two favorable contracts with US utilities during the quarter. These and other recently signed contracts provide incremental cash flow.
Meanwhile, the company is investing heavily in expanding its wind and solar energy platforms. Brookfield commissioned 1.2 gigawatts (GW) of new renewable energy capacity this quarter and is on track to complete a record 7 GW of projects this year. These new additions to the portfolio provide the company with additional sources of cash flow.
Brookfield also continues to deploy capital inside new investment opportunities. It deployed or committed to deploying $2.3 billion in the third quarter (of which $500 million will be directly funded). It is on track to deploy a record amount of more than $11 billion this year (of which $1.5 billion will be directly funded). The most recent example was purchasing a stake in several operational British offshore wind farms ($570 million direct investments). These new investments also add new sources of FFO.
“Based on our strong results to date and our guidance for the remainder of the year,” CEO Connor Teskey said in the third quarter earnings report, “we continue to expect to achieve our growth target of greater than 10% FFO per unit reaches. for 2024.” The company will continue to benefit from strong energy prices, the completion of development projects and new investments.
The company expects to grow FFO per share by more than 10% annually in the coming years. It has very visible secured growth until 2029 and increasingly visible secured growth until 2034.
For example, the company has 6,000 gigawatt hours of hydroelectric power generation available for recontracting in the next five years. Given the increasingly positive market environment for clean energy, Brookfield expects to sign higher power purchase agreements for this capacity as existing contracts expire, which will generate additional FFO in the coming years.
Meanwhile, the company continues to scale up its development activities. It expects to deliver 8.4 GW of new capacity next year and 9.1 GW in 2026. The growth rate could accelerate further in the futuremade possible by agreements to supply power to technology companies. For example, it has already agreed to provide it Microsoft with more than 10.5 GW of new renewable energy capacity in the period 2026-2030.
Finally Brookfield’s capital recycling strategy should continue to increase the growth rate. The company has agreed to sell more than $2.3 billion in assets this year (net $1 billion on the balance sheet). providing it with capital that can be deployed in higher-yielding new investments. It also expects to continue selling select assets to increase its financial flexibility. Meanwhile, the company continues to find new investment opportunities. It currently has a robust pipeline of M&A opportunities valued at over $100 billion.
Brookfield Renewable believes it can grow its FFO per share by more than 10% annual for the next decade. The country has increasing visibility and confidence in these prospects thanks to its extensive development pipeline and growing demand for clean energy. That earnings growth will give the country the strength to further increase its high-yield dividend, which it aims to grow at 5 to 9% annually.
Put it all together and Brookfield could produce annual total returns in mid-teens. That makes it an exceptional long-term investment opportunity.
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Matt DiLallo holds positions at Brookfield Renewable and Brookfield Renewable Partners. The Motley Fool holds positions in and recommends Microsoft. The Motley Fool recommends Brookfield Renewable and Brookfield Renewable Partners and recommends the following options: long January 2026 rings $395 on Microsoft and short January 2026 rings $405 on Microsoft. The Motley Fool has a disclosure policy.
This 4.5% Yield Dividend Stock Continues to Deliver Strong Growth Originally published by The Motley Fool
