This nearly 5% yielding dividend stock continues to add more fuel to fuel its strong growth engine

Brookfield Renewables (BEPC 3.44%) (BEP 3.96%) is a global leader in renewable energy. It sells energy produced by its hydroelectric, wind and solar power assets under long-term contracts to utilities and large corporate buyers. These agreements provide the company with predictable cash flow to sustain its close 5% yield dividend.

The company has consistently grown its high-yielding dividend by growing its clean energy business. In addition to increasing it renewable energy capacity, Brookfield leveraged its expertise to expand into developing other sustainable solutions. It recently added another new growth engine to its portfolio, which could give its growth engine even more fuel.

Adding another sustainable investment

Brookfield Renewable has quietly built a growing portfolio of sustainable solutions businesses. Its operational capabilities include carbon capture and storage (CCS), biofuel production, recycling and global nuclear services.

The company and its partners are investing to develop those business lines and build a solar panel manufacturing platform. These investments help diversify revenue and add new growth platforms that it can scale in the future.

The company funds these efforts through its investments in the Brookfield Global Transition Fund (BGTF) strategy, which its parent, Brookfield Asset Management (BAM 0.97%)he manages The first fund, BGTF I, raised a record $15 billion. Brookfield Asset Management followed up with a second fund, BGTF II, which already raised more than $10 billion in its first close earlier this year.

Brookfield has put this capital to work as it finds compelling investment opportunities in the energy transition space. He recently agreed to invest more than $200 million in Infinium and its Roadrunner project. In addition, Brookfield and its partners may invest up to an additional $850 million in other Infinium eFuels projects.cts around wworld

The Roadrunner project is developing a next-generation sustainable aviation fuel (eSafe) which could reduce emissions by 90% compared to conventional fuels. The company is making the investment (its the first in the SAF sector) through BGTF I.

Infinium has already started marketing the Project Roadrunner. He signed an agreement with American Airlineswhich will begin buying the fuel produced by Project Roadrunner in 2026. This project could also produce eNafta (which companies can use in plastics production) and eDiesel (which could be used by the long-haul trucking sector).

Strong growth ahead

Brookfield Renewable has a lot of built-in growth ahead. The company’s existing renewable energy contracts include inflation-driven rate escalation clauses that should add 2% to 3% to its funds from operations (FFO) per action every year. Meanwhile, it sees margin-enhancing activities, such as providing ancillary services to existing customers, adding another 2% to 4% to FFO per share each year.

In addition, Brookfield Renewable has a large development pipeline. It has a staggering 230 gigawatts (GW) of renewable energy projects in various stages of development. This leads it to believe it can develop around 10 GW of new capacity each year over the next few years.

In addition, the company has an extensive portfolio of sustainable solutions development projects funded through its investment in BGTF I and BGTF II. Projects include additional CCS, biofuels, rrecycling capacity, solar panel manufacturing and now its investments in eSAF. The company expects its development pipeline to add another 3% to 5% per share each year to FFO.

Finally, Brookfield expects to continue to be active in mergers and acquisitions (M&A). The company and its partners recently agreed to acquire a majority stake in Europe’s leading renewable energy company Neocene. They expect to close that majority interest and then offer to buy the rest of the company from its other investors. Brookfield sees increased M&A driving FFO growth above 10% annually.

The company’s strong growth will give it plenty of fuel to raise its dividend. He has increased his pay at a compounded annual rate of 6% over the past 20 years. Brookfield Involves Annual dividend growth of 5% to 9% over the long term.

Strong total return potential

Brookfield Renewable continues to add fuel to its sustainable growth engine, thanks in part to its relationship with Brookfield Asset Management. Its parent continues to open the door to new growth areas through its BGTF strategy, which adds to the company’s already robust growth outlook.

That growth, plus the company’s consistently growing high-yielding dividend, could give the company the power to produce totally strong returns in the coming years. That makes it a great stock to buy for its income and growth potential.