Investing does not require a substantial sum of money. With only about $45, you can purchase a single share of Brookfield Renewable (BEPC +0.24%)(BEP +0.39%) today. This investment would generate a stream of growing dividend income and also provide the possibility of significant stock price appreciation in the future.
Here's why Brookfield Renewable is a great dividend stock to buy right now.
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A high-quality, high-yielding payout
At its recent share price of $45, Brookfield Renewable offers a 3.4% dividend yield. That's about triple the S&P 500's dividend yield (around 1.1%).
Brookfield Renewable backs its high-yielding dividend with stable cash flow. The company operates one of the world's largest renewable energy platforms spanning hydro, wind, solar, and energy storage facilities. Additionally, it has a growing portfolio of sustainable solutions, including its investment in the leading global nuclear energy services company, Westinghouse. These assets generate steady revenues backed by long-term contracts and government-regulated rate structures. Most of those revenue frameworks link rates to inflation.
NYSE: BEPC
Key Data Points
The company further backs its high-yielding dividend with a strong balance sheet. Brookfield has a high credit rating, low-cost long-term debt, and lots of liquidity. It routinely refreshes its liquidity by selling mature assets to recycle capital into new, higher-returning investments.
These features put the company's high-yielding payout on a very sustainable foundation.
The power to continue growing
Brookfield Renewable has grown its payout at a 6% compound annual rate since 2001. It aims to deliver 5% to 9% annual dividend growth over the long term.
The company has ample power to achieve that target. Brookfield's long-term contracts, which include built-in inflation-linked escalation clauses, should drive 2% to 3% annual growth in its funds from operations (FFO) per share through 2030. Additionally, margin enhancement activities, such as securing higher power prices as legacy agreements expire, should add another 2% to 4% in FFO per share each year. The company recently signed 20-year deals with Google and Microsoft at three of its hydro facilities, locking in much higher power rates and enhancing its margins.
Additionally, Brookfield expects to invest heavily to continue expanding its portfolio through development projects and acquisitions. The company plans to ramp up its development capabilities and deliver 10 gigawatts of new renewable energy capacity annually by 2027, supporting 4% to 6% annual FFO growth per share. Brookfield also pursues acquisitions to further accelerate its growth, as seen in its recent $1 billion investment in Colombian hydropower producer Isagen, which increased its stake to 38%. This acquisition should add an incremental 2% in FFO per share next year.
Brookfield's quartet of growth drivers -- contracted inflation escalators, margin enhancements, development projects, and acquisitions -- supports its view that it can deliver more than 10% annual FFO per share growth through 2030. Meanwhile, growth could accelerate further due to new opportunities. For example, Westinghouse recently signed a deal with the U.S. Government to supply at least $80 billion of new nuclear reactors to help power AI. Brookfield should also benefit from accelerating renewable demand growth to meet AI's power needs.
Powerful total return potential
Brookfield Renewable pays a dividend yielding more than 3%, which it should be able to grow at a 5% to 9% annual rate for years to come. With its FFO expected to grow by more than 10% annually, its high-yielding payout should become even more sustainable in the future. That combination of income and growth positions Brookfield to produce powerful total returns in the coming years, making it a great dividend stock to buy right now.
