When it comes to investing for the future, renewable energy stocks might be some of the best options that money can buy. But arguably, above all the rest should be Brookfield Renewable Partners LP (TSX:BEP.UN). So today let’s get into why this renewable energy stock is one that investors should consider on the TSX today.
Brookfield stock saw share prices skyrocket between 2019 and 2021 when the company hit around $70 per share. Yet since then, shares have fallen into oblivion, now trading at about half those highs. Part of this of course was because shares of the company had reached a fever pitch. Even so, there still seems to be an outside reason for the drop.
Another reason was the Federal Reserve and Bank of Canada engaging in massive rate hikes. This also weighed on the company on a global scale, as Brookfield stock has a global reach through its diversified assets.
Even so, this caused the company to increase its cost of capital, and investors were out. And with President Joe Biden promising investment into the renewable energy sector and unable to come through, this created even more pressure.
The bonus of this lower share price is now a higher dividend yield. Over the last five years, Brookfield stock has offered an average dividend yield at 4.32%. As of writing, that dividend yield is now at 5.05%! That’s far higher and offers a chance to bring in a dividend that isn’t going anywhere.
The fact is that this company is supported by long-term contracts which will continue to support a strong dividend. And while the company certainly will have issues with costs for now, eventually that will disappear once interest rates and inflation stabilize.
In fact, the stock is so stable because about 90% of its cash flow comes under contracts that are under 13-year power purchase agreements (PPAs). Further, 70% of revenue is protected under inflation escalators. This is where pricing will adjust to account for changing market conditions, such as inflation.
Growth to come
Perhaps the best part about Brookfield stock, however, is the growth opportunity. Not only does Brookfield stock have a chance at superior growth from cheap share prices, but it holds an advantage. It’s huge, and has lots of cash on hand.
In fact, the company believes it can still deliver between 12% and 15% returns for investors over the next few years. And frankly, not only does that seem attainable, but conservative. Countries are moving more and more towards clean energy production, and Brookfield is a worldwide option.
Furthermore, with all that cash on hand it’s ready to create more acquisitions before competitors. That will provide even more growth opportunities in the future. So with dividends, cheap options, and so much growth to come, Brookfield stock is certainly one to consider on the TSX today. And if you wait much longer, it won’t be a deal for those looking to make stellar gains in 2024 and beyond.