3 Reasons to Buy Brookfield Renewables Shares Like There’s No Tomorrow

Brookfield Renewables (BEP 0.42%) (BEPC -0.75%) has an exceptional track record of increasing value for its investors. The world’s largest producer of renewable energy has increased its funds from operations (FFO) at a compound annual rate of 12% since 2016. Meanwhile, it has seen a 6% compound annual growth in its dividends per share since 2001. This has contributed to an average annual total return of 11, 3% in the last period. 10 years.

The company could produce an even stronger total return in the future. Here are three reasons why investors should back the truck and buy renewable energy stock as if there is no tomorrow right now.

A strong passive income stream

Brookfield Infrastructure’s attractive and growing dividend is a significant part of its value proposition. The company currently offers a dividend yield over 4.5%. It is several times larger than S&P 500his dividend yield below 1.5%.

That high-yielding dividend is on a very sustainable footing. Brookfield generates very stable cash flow, with 90% coming from long-term, fixed-rate power purchase agreements (PPAs). The company pays a conservative portion of its stable cash flow in dividends, at 74% of its value FFO in the first half of this year. This gives it a cushion while allowing it to retain cash for other uses. Brookfield also has a strong investment balance sheet with plenty of liquidity, further enhancing its financial flexibility.

The company expects to increase its dividend by 5% to 9% annually. It has posted annual dividend growth of at least 5% for 13 Justice years.

A strong growth profile

Brookfield Renewable can easily support its dividend growth plan. The company has very visible and secured growth through 2029. It also has increasing visibility on its secured growth through 2034. It is expected to deliver annualized FFO per share growth of 10% over that time frame.

Four factors influence this view:

• Escalating inflation: Approximately 70% of Brookfield’s PPA index revenues TO inflation. This drives the company’s expectation that escalating inflation will add 2% to 3% to FFO per share each year.
• Margin increase: Brookfield expects to lock in higher market prices as old PPAs expire. It has 6,000 gigawatts (GW) hours of capacity available for recontracting over the next five years, which could add up to $100 million in additional FFO, or about 2%, to its total each year. Add in other margin-enhancing activities, such as providing ancillary services, and this catalyst could increase FFO per share by 2% to 4% annually.
• Development pipeline: The company has a massive development pipeline with over 200 GW of projects in various stages. It is expected to deliver an average of 10 GW of new capacity annually through the end of the decade. These investments should increase its FFO per share by 4% to 6% per year.
• Mergers and acquisitions activities: Brookfield has an excellent track record of making incremental acquisitions. It routine recycle capitalthe sale of mature assets to finance new, higher-yielding investments — for example, recycling Saeta Yield and Hydro One in Neoen. M&A activities can further improve its FFO per share growth rate.

A screaming bargain

of Brookfield share price not at present reflects its excellent track record of increasing shareholder value. The stock is down nearly 50% from its peak a few years ago. This decline came even as the company continued to grow rapidly. It is trading at a very attractive valuation these days.

The company is about to generate about $2.00 of FFO per share this year. With a share price of $31 for the corporation (BEPC) and $26 for the economic equivalent limited Partnerships (BEP), Brookfield trades at a mid-teens multiple of FFO. It is very cheap in a market where S&P 500 jobs TO over 24 times earnings.

Supercharged total return potential

Brookfield Renewable is one of the most compelling investment opportunities these days. The renewable energy producer pays a very bankable dividends that pay off over 4.5%. It is expected TO keep growing that payment with an annual rate of at least 5%. Meanwhile, it has visible and assured earnings growth potential of over 10% annually for the next few years. Additionally, it trades at a reduced valuation. Put it all together and Brookfield Renewable could easy generate total annual returns in the mid-teens in the coming years. That’s why investors should buy these stocks like there’s no tomorrow.