Most investors are looking for life-changing stocks. Too many investors, however, go about it the wrong way, taking oversized risks on tickers that might soar, but likely won't. Ironically, slow and steady often proves a more rewarding approach than proverbially "going for broke."
To this end, anyone looking to establish a bright distant future may want to consider taking a stake in boring ol' Brookfield Renewable (BEPC -2.06%) (BEP -2.13%) now.
What's Brookfield Renewable?
It's not exactly a household name. In fact, there's a good chance you've never even heard of it. Don't let that deter you, though. This stock checks a lot of boxes that most investors look for.
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Exciting entertainment isn't one of them, mind you. In an environment where buying and selling high-profile stocks like Nvidia, Apple, or Space Exploration Technologies is practically treated like a hobby, Brookfield Renewable is comparatively boring. As the name suggests, it holds a portfolio of privately owned renewable energy ventures like hydroelectric power plants, wind farms, and solar power facilities.
Reliable marketability isn't what makes this name such a compelling prospect, however. Brookfield's edge lies in how it's built and what it's built to do. This organization's managers aim to buy and hold energy-related assets that generate consistent -- and consistently growing -- cash flow that's used to fund dividend payments.
The irony? This seemingly conservative approach may prove more rewarding for patient shareholders than the average growth stock might. Factoring in its targeted annual cash-payment growth of 5% to 9%, management targets total net average annual returns of 12% to 15%.
Crunching the numbers
Given what we've seen so far, there's every reason to believe Brookfield Renewable can meet these targets indefinitely. Despite the current economic headwinds, last quarter's per-share operating bottom line was up 11% year over year, capping off a 12-month stretch of roughly the same rate of profit growth. It's a testament not just to the growing demand for electricity, but also to Brookfield's management team's ability to pick the right projects capable of delivering it.
Perhaps more important, a steady average annual return of 12% -- the lower end of Brookfield's long-term target -- could lead to shockingly bigger total returns than the S&P 500's average annual net return of 10%. A $10,000 investment in an S&P 500 index fund made today would be worth nearly $175,000 in 10 years' time, assuming you reinvested any dividends dished out in the meantime. At 12% per year, though, a $10,000 investment made today would be worth just under $300,000 in 30 years' time.
NYSE: BEPC
Key Data Points
Connect the dots. The seemingly little things turn into pretty big deals when allowed to compound over time. The key is simply letting them, by leaving things alone.
Safe enough to make a long-term commitment
Brookfield's growth targets aren't guarantees, of course. And past performance is no guarantee of future results.
The underlying premise holds water, though. Certainty reduces risk, allowing managers -- as well as investors -- to make bolder commitments to opportunities with solid long-term potential. That's why a position in Brookfield Partners could indeed set you up for life, even if it doesn't look or feel like the sort of explosive winner most people are usually hoping to find.
