Brookfield Renewable (BEPC 0.09%) (BEP 0.19%) recently closed the books on another solid year. The renewable-energy giant grew its funds from operations (FFO) by 7% per share. That gave it the power to increase its dividend by another 5% for 2024. It has now grown its payout by at least 5% each year since its public market listing 13 years ago.

The renewable-energy powerhouse should have plenty of power to continue pushing its payout (which currently yields 5%) higher in the future. That's clear from its 2023 results and outlook for what's ahead.

A solid year

Brookfield Renewable generated a record $1.1 billion, or $1.67 per share, of funds from operations (FFO) in 2023. That was a 7% increase from 2022's total. While that was below its target of delivering 10%-plus FFO per share growth last year, that was largely due to the timing of acquisitions, which closed later than expected during the fourth quarter. On top of that, Brookfield's hydroelectric assets experienced a more challenging year because of lower water reservoir levels.

The company closed or agreed to invest a net $2 billion last year across several deals. They included Westinghouse, Deriva Energy, the remaining 50% interest in X-Elio it didn't already own, Banks Renewable, and investments in CleanMax and Avaada in India. The company had also hoped to close its investment in Origin Energy last year but that company's investors voted against the deal.

In addition to the boost from those acquisitions, Brookfield also benefited from development projects. It commissioned 5 gigawatts (GW) of new renewable energy capacity last year, half of which entered service in the fourth quarter. It also continues to grow its sustainable solutions business, which contributed 5% of its FFO last year.

Powerful growth ahead

While timing worked against Brookfield last year, it will benefit the company in 2024. Since the renewable-energy producer closed several new investments right near the end of 2023, they didn't contribute much FFO during the fourth quarter. However, the company will experience the full impact of those investments this year. On top of that, it will benefit from a full year of the roughly 2.5 GW of new clean energy capacity that entered service in the year's final quarter.

Brookfield CEO Connor Teskey wrote in his fourth-quarter letter to investors, "We are already seeing the benefits of our growth activities, which were back-end weighted this year." The company also noted that headwinds affecting its hydroelectric fleet last year are fading, and that it expects "to also receive an uplift as our fleet reverts to its long-term average generation, particularly from our hydro assets where we often see cyclicality." The company has already started to see a rebound in reservoir levels this year.

Meanwhile, Brookfield has a lot more growth ahead. The company noted that its advanced-stage development pipeline is up to almost 24 GW of projects. Those projects will contribute $300 million in annual FFO when they come online in the future. That's a nearly 30% increase from its current level.

On top of that, the company expects to continue to find new investment opportunities. Brookfield noted that while Origin shareholders rejected its deal, other companies are very interested in a similar deal. Pollock wrote to shareholders, "We have received in-bounds from businesses around the world who are seeking a partner with significant capital and deep operating expertise to accelerate their transition goals and enhance the value of their businesses." That drives his confidence that the company will achieve its target of deploying $7 billion-$8 billion of capital into new investments over the next five years.

Brookfield estimates that its organic drivers will grow its FFO per share by 7% to 12% annually through 2028. Meanwhile, acquisitions could add more than 9% to its FFO per share each year. Those catalysts easily support Brookfield's plan to grow its 5%-yielding distribution by 5% to 9% per year.

The fuel to potentially produce powerful total returns

Brookfield Renewable didn't grow quite as fast as it anticipated last year because of the timing when it closed acquisitions and completed expansion projects. However, while those new investments didn't contribute much to its 2023 results, they'll provide plenty of power this year. Meanwhile, the company is increasingly optimistic about the growth that still lies ahead. It should have no problem continuing to grow its 5%-yielding payout by at least 5% per year. That should give it the fuel to produce double-digit total annual returns. This combination of income and upside potential makes Brookfield Renewable a great stock to buy right now.