Most high-yielding dividend stocks are slow growers. That’s what makes Brookfield Renewable (BEPC 2.92%)(BEP +0.57%) such an outlier. It offers a high-yielding dividend (currently 4.5%) and robust growth. Its earnings grew 15% during the first quarter and are up 12% over the last 12 months.
Brookfield expects to continue growing at a double-digit pace for at least the next five years. That makes the leading renewable energy dividend stock a no-brainer buy right now.
Image source: Getty Images.
High-powered growth
Brookfield Renewable generated $375 million, or $0.55 per unit, of funds from operations (FFO) during the first quarter. That was up 19% overall and 15% per unit.
The company’s hydroelectric platform grew its FFO by 30%, driven by strong pricing and higher generation at its Canadian and Colombian fleets. That more than offset weaker results in the U.S., which included the sale of a non-core portfolio. Meanwhile, its wind and solar energy segments grew their earnings by 60%, powered by contributions from newly developed assets and the acquisitions of Neoen and Geronimo Power. That more than offset lower earnings within Brookfield’s distributed energy, storage, and sustainable solutions businesses, driven by the sale of its U.S. distributed energy platform. Earnings in that segment would have risen if it weren’t for that sale, powered by the strong performance of its nuclear energy business, Westinghouse.
Today’s Change
(-2.92%) $-1.06
Current Price
$35.20
Key Data Points
Market Cap
$6.3B
Day’s Range
$34.88 – $36.38
52wk Range
$27.27 – $45.18
Volume
3.2M
Avg Vol
1.4M
Gross Margin
25.25%
Dividend Yield
4.29%
More growth on the horizon
Brookfield Renewable also made excellent progress on its growth strategy in the first quarter. The company and its partners committed to deploying up to $2.2 billion in expansion initiatives, of which Brookfield will fund $550 million. The biggest new investment is Boralex, a Canadian renewable power platform. Boralex has 4 gigawatts (GW) of wind, solar, hydro, and battery storage assets currently operating or under construction and another 8 GW under development across the U.S., U.K., Canada, and France.
The company also delivered 1.8 GW of new capacity during the quarter and secured contracts for another 1.7 GW of development projects in its pipeline. Brookfield continues to ramp up its annual development activities toward its target of 10 GW in annual deliveries by 2027. Meanwhile, Westinghouse is making progress on advancing new utility-scale reactors as part of its strategic partnership with the U.S. government.
The company is funding these growth investments by selling mature assets. It has signed deals that will generate $820 million in net proceeds. One notable transaction was the launch of Northview Energy in partnership with two institutional investors and a Brookfield fund. Brookfield will seed the company with $1.3 billion in assets. It can sell up to an additional $1.5 billion in assets to that entity in the future. Brookfield is recycling the capital from asset sales into development projects and acquisitions such as Boralex.
These initiatives support Brookfield’s strategy of delivering more than 10% annual FFO per share growth through at least 2030. That should enable it to continue increasing its dividend by 5% to 9% each year.
High-powered total return potential
Brookfield is growing briskly, and that rapid growth should continue for the foreseeable future. That should give it plenty of fuel to continue increasing its high-yielding dividend. This combination of income and growth positions it to deliver high-powered total returns, making Brookfield a no-brainer energy stock to buy and hold for the long haul.
Matt DiLallo has positions in Brookfield Renewable and Brookfield Renewable Partners. The Motley Fool recommends Brookfield Renewable and Brookfield Renewable Partners. The Motley Fool has a disclosure policy.