1 high-powered dividend stock to buy like there’s no tomorrow

Brookfield Renewables (BEPC -0.10%) (BEP 0.38%) has an excellent record of paying dividends. The world’s largest producer of renewable energy has grown its payout at a compound annual rate of 6% over the past two decades. He has increased his pay by at least 5% for 13 years in a row.

The company is just getting started. It has several catalysts that should combine to deliver more than 10% annual growth in its funds from operations (FFO) per share through at least 2028. That will easily give it the leverage to support its plan to increase its dividend by 5% to 9% annually. As Brookfield Renewable already offers a high yield payout (more than 4.5%), it should have the fuel to generate supercharge. total returns in the following years.

Built on a solid foundation

Brookfield Renewable operates one of the largest publicly traded renewable energy platforms in the world. It owns hydro, wind, utility-scale solar, distributed energy and storage assets in all major markets that have the ability to produces 34 gigawatts (GW) of power. In addition, it has a growing portfolio of sustainable solutions such as biofuel production, recycling, carbon capture and storageand nuclear services. These assets generate predictable and stable cash flow, supported by long-term contracts with utilities and large corporations.

Most of its contracts index prices to inflation (70% of Brookfield’s revenue). Because of this, it should provide the company with a stable and ever-growing cash flow. Brookfield expects FFO per share to grow 2% to 3% annually due to rising inflation alone.

The company paid out less than 75% of its stable cash flow as dividends in the first half of this year. This gave it a solid cushion and allowed it to retain cash to fund its continued expansion.

Brookfield has it too a very strong one balance sheet. It has investment-grade credit and primarily uses long-term, fixed-rate debt to finance its business. The company also has plenty of liquidity, which this is commonly completed by recycling capital. It had $4.4 billion of available cash at the end of the second quarter and expected asset sales to generate $1.3 billion in net proceeds this year.

Very visiblestrong growth prospects

Inflation escalators are one of several growth drivers for Brookfield. The company also expects margin-enhancing activities, such as providing ancillary services to existing customers, to add another 2% to 4% to FFO per share each year. This means an annual growth of 4% to 7% without investing any capital.

And while Brookfield Renewable can grow at a solid pace without investing any capital, it currently expects to deploy $7 billion to over $8 billion over the next five years for high-yield development projects and incremental acquisitions. The company has a absolute a massive pipeline of renewable energy projects in the pipeline (a staggering 200 GW in various stages of development). This pipeline supports its view that it can develop around 10 GW of projects annually over the next few years. These projects will help increase FFO per share by an additional 3% to 5% annually.

It recently signed a mega-deal to develop 10.5 GW of projects for the tech giant Microsoft between 2026 and 2030 to support its cloud and artificial intelligence (AI) growth. This was the largest power purchase agreement (almost eight times the previous record).

In the meantime, Brookfield expects to continue to make increased acquisitions. For example, the company and its partners recently agreed to acquire a majority stake Neocenea leading global renewable energy platform based in France. The company expects to close the majority investment and then buy the rest of Neoen from its remaining investors. This deal will add a large-scale operating platform (8 GW of operational assets and under construction) and a large pipeline of late-stage projects (20 GW).

The company also recently made the first investment in South Korea and extended its leadership platform to India. These offerings and future ones should help push the FFO growth rate above 10% annually.

Brookfield Renewable could grow at a robust pace for years, if not decades, to come. The company believes that the next two decades will be a unprecedented period for the accumulation of electricity fueled by data centers, electric vehicles and other catalysts. As a leader in the development of renewable energy, Brookfield is perfectly positioned to capitalize on this massive opportunity.

The potential to produce prodigious total profits

Brookfield Renewable pays more than 4.5% yield dividend supported by a solid foundation. It is expected to grow that payout by 5% to 9% per year, while growing its FFO per share at an even faster rate of 10% more annually. These factors position the company to potentially generate an average annual total return of 15% or more. This is a fantastic return potential from such a low risk investment opportunity, reason why investors should buy these stocks like there is no tomorrow.