When you step back and think about it, artificial intelligence (AI) is nothing more than a fancy computer program. That means it has to be run on a computer. And that computer won't run without a reliable power source. This is why dividend investors will find this exciting, ultra-high-yield investment opportunity so appealing.
Brookfield Renewable is clean, global, and already in the market
Brookfield Renewable (BEP +2.15%)(BEPC +2.65%) is a clean and renewable power company. It has assets in the hydroelectric, solar, wind, storage, and nuclear power sectors. And it has operations in North America, South America, Asia, and Europe. It is basically a one-stop shop for customers looking for clean energy. It is also a one-stop shop for investors looking for exposure to the renewable power sector.
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Right now, there's a major buildout underway to support artificial intelligence. The need for reliable power is huge, and Brookfield Renewable is already partnered with Microsoft and Alphabet's Google to provide them with electricity. Google's 3-gigawatt deal is particularly interesting because it is centered specifically around hydroelectric power. Microsoft's deal is over three times larger and, perhaps by necessity, isn't tied to any specific energy source.
There is plenty of cash to go around
The AI opportunity is clear, but what does that mean for investors? For Brookfield Renewable shareholders, it means dividends. For starters, the partnership class of Brookfield Renewable is offering a lofty 5.2% yield. The corporate class has a yield of 3.8%. The two classes represent the same entity and have the same dividend. The yield difference is driven by demand, with institutional investors often barred from owning partnerships.
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Key Data Points
Those dividends, meanwhile, are backed by long-term power supply contracts. So the cash flows Brookfield Renewable generates are reliable. Given the company's expectation of up to $10 billion in capital investment opportunities over the next five years, there's also room for growth.
Management is targeting distribution growth of between 5% and 9% a year for the foreseeable future. Over the past decade the dividend has grown at a compound annual rate of 6%, so this target is clearly feasible.
If you are a dividend investor, this ultra-high-yield opportunity could be your way to join the excitement around artificial intelligence as it expands into new industries. That said, demand from the AI buildout isn't likely to be a one-time event; Brookfield Renewable is likely to benefit from AI spending for years to come.
