Speculators see stocks as nothing more than tickers to be bought and sold in rapid fashion. Investors, though, understand that there are real companies behind those tickers and take the time to understand said company's story. Often, this leads to investments that last for years at a time, which allows investors to capture the long-term upside potential in a company's growth. Three names long-term investors might want to look at today are Brookfield Renewable Corporation (BEPC -3.08%), Innovative Industrial Properties (IIPR 3.22%), and Unilever (UL 0.41%).
1. Brookfield Renewable Corporation
The world is moving toward cleaner energy alternatives, but the transition will likely take decades. That's why Brookfield Renewable Corporation has years of growth ahead of it, as it looks to build out a portfolio of renewable power assets. Its core assets, at around half of its revenues, are centered on hydroelectric power, a reliable and old technology. The rest of the portfolio is focused on faster-growing solar, wind, and other assets (like storage). Revenues were up about 11% year over year in the first quarter with funds from operations (FFO) up an even larger 18%.
The key story here, however, is that Brookfield Renewable Corporation has a 69-gigawatt development pipeline ahead of it. That's built-in growth. Just how big is that growth? The company currently operates 21 gigawatts' worth of clean energy assets, so it could more than triple in size as it builds out its portfolio.
This growth won't happen overnight, but that's good, too. Investors can collect the company's generous 3.5% dividend yield, backed by a growing dividend payment, while management focuses on this development pipeline.
2. Innovative Industrial Properties
Innovative Industrial Properties is deeply out of favor today, having fallen 60% from its late 2021 highs. That, however, has pushed the dividend yield up to a historically high 6.2%, suggesting the stock could be cheaply valued today.
The big story here is that this real estate investment trust (REIT) owns marijuana grow houses. The pot industry is expected to nearly double in size between 2020 and 2026. So there's still a huge opportunity for Innovative Industrial to keep expanding. Notably, the REIT ended 2021 with 103 properties but has since increased that to 111 roughly halfway through 2022 while also continuing to invest in existing assets and, thus, increasing their value and rent generating ability.
Grow houses are generally tightly regulated, with the ability to use them for marijuana cultivation tied to the property and not the tenant. So even if a lessee were to get into financial trouble, it is likely that there will still be demand for the property within the still-expanding pot industry. Meanwhile, Innovative Industrial is offering a vital funding source to its renters via sale/leaseback deals, while banks remain leery of offering them loans. If you can handle an upstart situation, this high-yield stock might be of interest to you.
European consumer staples giant Unilever is comparatively boring; it sells iconic branded products like Dove and Ben & Jerry's. That said, it has a very solid business with a global reach. It isn't performing quite as well as its peers are today. For example, sales over the past three years up less than 1% on an annualized basis with earnings advancing and earnings actually dropping. For reference, peer Procter & Gamble grew sales at an annualized clip of 4.4% over the past three fiscal years with earnings up over 14% a year, on average. But the difference between the performance of these two companies is actually why it is so interesting.
For starters, the yield is a historically high 4.2% because the relatively weak business performance has caused the stock price to decline. On top of that, the company recently added dissident shareholder Nelson Peltz to its board. That's big news because this is the investor who helped to turn peer Procter & Gamble around when the company was facing performance issues not too long ago. There's clearly no guarantee of a similar business rebound at Unilever, but given the company's strong foundation, it is highly likely that things will start to look better at some point, and Peltz should help that process along.
This probably won't be an easy or quick fix, but Unilever is already adjusting the way its business is organized to streamline operations and increase accountability, which is a good starting point. And that was before Peltz was on the board.
Which is the best buy for you?
Brookfield Renewable Corporation, Innovative Industrial Properties, and Unilever are all very different companies, but they each have an interesting and unique story to tell. That's particularly true if you are a long-term investor. All three could be worthwhile additions to your portfolio, with Brookfield Renewable Corporation and Unilever probably more appropriate for conservative investors and Innovative a name that aggressive types might prefer.