Renewable power is the big story in the utility space, and Brookfield Renewable Partners (NYSE:BEP) is poised to take advantage of the trend. And when you combine its position in energy with the assist it gains from having the experienced Brookfield Asset Management (NYSE:BAM) as its parent company, and factor in a distribution currently yielding 4.7%, this is a stock that investors of all types should be ready to take a close look at. Here's what is going on at Brookfield Renewable Partners that's so exciting today.

A strong foundation for a long-term investment

There's a lot to like about Brookfield Renewable Partners, but one of its most appealing features is also its most boring business -- hydroelectric power. This is, perhaps, the oldest form of renewable power, but it's also one of the most reliable. Water levels have an impact on it, but largely it just keeps going and going without fail, which makes it usable as a base-load power source. Hydroelectric accounts for roughly 75% of the partnership's generating capacity today. 

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This is a big deal because it provides a stable core of revenue to support Brookfield Renewable Partners' distribution, which now yields more than twice what you would get from an S&P 500 Index fund. And the disbursement has been increased for 10 consecutive years at by an average percentage in the mid-single digits, outpacing the historical rate of inflation, which hovers in the 3% range. 

With a roughly $8 billion market cap, meanwhile, Brookfield Renewable Partners isn't an industry small fry. While not as large as some of the major utilities, it can still take on sizable projects and acquisitions. That said, parent Brookfield Asset Management, with over 100 years of experience in infrastructure investing behind it, and its roughly $60 billion market cap, gives it some heft. Colloquially speaking, the combination allows Brookfield Renewable Partners to punch above its weight class. 

Getting bigger in solar and wind

So this is the foundation, and experience, on which the next year or so will be built. But what will that time bring? In a word -- growth. There are two ways that Brookfield Renewable Power expands: construction and acquisitions. Investors should keep an eye on both over the next year or so. 

Although outsiders can't really predict a company's acquisition plans until they are made public, Brookfield Renewable Power recently offered to buy solar and wind focused TerraForm Power (NASDAQ:TERP). The roughly $4 billion deal would give the partnership full ownership of TerraForm Power, an entity it already controls via a roughly 62% stake (through its direct investments and those of Brookfield Asset Management). It would also shift Brookfield Renewable Power's portfolio a bit more toward solar and wind, with hydropower dropping to about 60% of its capacity.   

BEP Dividend Per Share (Quarterly) Chart

BEP Dividend Per Share (Quarterly) data by YCharts

That's a key consideration in the renewable power space, since solar and wind are where the bulk of the partnership's growth is likely to come from. There are only so many locations where a hydroelectric power plant can be built, and most are already taken. Thus, increasing its scale in solar and wind is a smart call. It also augments the partnership's construction plans (of which TerraForm Power was already a component).

At present, Brookfield Renewable Power has two projects (one solar and one wind) that are projected to come on line in 2020, adding around $2 million to funds from operations (FFO). The bigger push is expected to come in 2021, when another pair of projects (hydro and storage) come on line, adding $9 million to FFO. Beyond that, Brookfield Renewable Partners has projects on the drawing board that it believes can add as much as $55 million to FFO over time. 

So the next year is likely to bring modest growth from contractual price increases on existing assets. Modest growth from new project development. And possibly (perhaps likely, given its controlling stake), a nice boost from the acquisition of TerraForm Power. In other words, continued business growth which will help to boost FFO and distributions. Given that the company already announced a 5% distribution hike in January, it's unlikely that investors will see another bump this year. There's a chance that it will be increased again after the TerraForm Power deal is done, but don't go in counting on that. Still, the foundation is being laid for at least another mid-single-digit percentage increase in 2021.    

Focused on the energy future

If you are an ESG investor looking to add a clean energy company to your portfolio, or if you just see the writing on the wall and believe that carbon-energy-centric businesses will be dead money, then you should give Brookfield Renewable Power a deep dive. It has a solid operating history and has rewarded income investors over the last decade, offering a healthy mix of yield and distribution growth. With a notable acquisition in the works and projects under construction set to come online over the next year or so, there's a good reason to think that Brookfield Renewable Power will keep doing what it has been, and doing it well, for at least the next year (and likely much longer).