Brookfield Renewable Corp. (BEPC 1.93%) is a complex entity. It has sister units that trade as Brookfield Renewable Partners (BEP 1.39%), and both are run by another company, Brookfield Asset Management (BAM 3.11%).
But given the plans Brookfield Asset Management has for investing in clean energy, high-yielding Brookfield Renewable Corp. could set you up with a lifetime of reliable income.
Here's what you need to know before buying it.
What is Brookfield Renewable Corp.?
From a high-level view, Brookfield Renewable Corp. is a source of permanent capital for Brookfield Asset Management. So, too, is the sister unit, Brookfield Renewable Partners. In fact, they represent the exact same business and pay the exact same quarterly dividend amount. But Brookfield Renewable Corp.'s dividend yield is 4.7%, and Brookfield Renewable Partners' distribution yield is 5.8%.
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How can these two Brookfield entities be the same but have different yields? That gets to the heart of the issue.
Brookfield Renewable Partners existed first, but as a partnership, many institutional investors couldn't buy it (institutional investors are often barred from buying partnerships by their investment mandates). So Brookfield Renewable Corp. was created to allow a larger pool of investors to buy into the Brookfield entity. The yield difference reflects the fact that the corporate share class is more popular than the partnership units.
And this all ties back to the fact that Brookfield Asset Management runs Brookfield Renewable. In either form, it is really just a way to invest alongside Brookfield Asset Management as it invests in clean energy infrastructure.
Infrastructure has long been the Canadian asset manager's specialty. Brookfield Renewable is valuable to Brookfield Asset Management because once it sells a unit or share, that unit or share continues to exist until it is bought back by Brookfield Renewable. In other words, the cash raised doesn't have to be repaid, like a bond would require.
That's a lot to work through, but it is important to understand as you think about buying Brookfield Renewable Corp. and its lofty 4.7% dividend yield.
What does Brookfield Renewable Corp. do?
With that foundation, it is time to examine the actual business of Brookfield Renewable. As its name implies, it owns renewable power assets. Its portfolio spans across solar, wind, hydroelectric, and battery storage. More recently, it added nuclear power to the equation.
It basically provides exposure to every kind of clean energy power source that is scalable. And it invests on a global scale, with operations in North America, South America, Europe, and Asia. Brookfield Renewable, in either corporate or partnership form, is basically a one-stop-shop for clean energy investing.
The dividend here has grown steadily over time as Brookfield Renewable's portfolio has grown. The goal is for annual dividend increases of between 5% and 9%. The long-term growth that backs those increases will come as Brookfield Renewable is used as a funding source to support Brookfield Asset Management's growth plans. And those plans include roughly doubling the asset manager's investment in clean energy between 2025 and 2030.
While it would be hard to suggest that growth is locked in, it seems highly likely that Brookfield Renewable Corp. will have the wind at its back on the growth front. But there's another wrinkle to keep in mind.
Brookfield Renewable's parent is an asset manager, and it is always buying and selling assets. Thus, Brookfield Renewable's portfolio is always changing, too. This is not a regulated electric utility and shouldn't be viewed as one, even though the energy contracts that back the business create a reliable income stream.
Can Brookfield Renewable Corp. set you up for life?
Given the purpose of Brookfield Renewable Corp. and Brookfield Asset Management's growth plans, it seems highly likely that buying Brookfield Renewable Corp. can set you up with a lifetime of reliable income. So, too, could higher yielding Brookfield Renewable Partners, if you don't mind owning a partnership. But the key is to understand what you are buying, given the complexity of the interconnections that exist here.
