Brookfield Renewable(NYSE: BEPC)(NYSE: BEP) has a stellar record of paying dividends. The leading global renewable energy producer has grown its payout at a 6% compound annual rate over the last two decades. It has raised its payment 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 10%-plus annual growth in its funds from operations (FFO) per share through at least 2028. That will easily give it the power to support its plan of raising the dividend by 5% to 9% annually. With Brookfield Renewable already offering a high-yielding payout (more than 4.5%), it should have the fuel to generate supercharged total returns in the coming years.
Built on a rock-solid foundation
Brookfield Renewable operates one of the world's largest publicly traded renewable energy platforms. It owns hydro, wind, utility-scale solar, distributed energy, and storage assets across all major markets that have the capacity to produce 34 gigawatts (GW) of power. In addition, it has a growing portfolio of sustainable solutions, like biofuel production, recycling, carbon capture and storage, and nuclear services. These assets generate predictable, stable cash flow backed by long-term contracts with utilities and large corporations.
Most of its contracts index prices to inflation (70% of Brookfield's revenue). Because of that, they should supply the company with stable and steadily rising cash flow. Brookfield expects its FFO per share to increase by 2% to 3% per year due to inflation escalation alone.
The company paid out less than 75% of its stable cash flow in dividends during the first half of this year. That gave it a solid cushion and allowed it to retain cash to help fund its continued expansion.
Brookfield also has a very strong balance sheet. It has investment-grade credit and primarily uses long-term, fixed-rate debt to fund its business. The company also has lots of liquidity, which it routinely replenishes by recycling capital. It had $4.4 billion of available liquidity at the end of the second quarter and expected asset sales to generate $1.3 billion of net proceeds this year.
Highly visible, high-powered growth prospects
Inflation escalators are one of several growth drivers for Brookfield. The company also expects margin enhancement activities like providing ancillary services to existing customers to add another 2% to 4% to its FFO per share each year. That's 4% to 7% annual growth without investing any capital.
And while Brookfield Renewable can grow at a solid rate without investing any capital, it currently expects to deploy $7 billion to more than $8 billion over the next five years on high-return development projects and accretive acquisitions. The company has an absolutely massive pipeline of renewable energy projects in the backlog (a staggering 200 GW in various stages of development). That pipeline supports its view that it can develop about 10 GW of projects annually for the next several years. Those projects will help grow its FFO per share by an additional 3% to 5% annually.
It recently signed a mega-deal to develop 10.5 GW of projects for tech giant Microsoft between 2026 and 2030 to support its cloud and artificial intelligence (AI) growth. That was the largest-ever corporate power purchase agreement (almost eight times larger than the previous record).
Meanwhile, Brookfield expects to continue making accretive acquisitions. For example, the company and its partners recently agreed to acquire a majority stake in Neoen, a leading global renewable energy platform based in France. The company expects to close the majority interest investment and then buy out the rest of Neoen from its remaining investors. That deal will add a large-scale operating platform (8 GW of operating and under-construction assets) and a large pipeline of advanced-stage projects (20 GW).
The company also recently made its first investment in South Korea and expanded its leading platform in India. These and future deals should help drive its FFO growth rate above 10% annually.
Brookfield Renewable could grow at a robust rate for years, if not decades, to come. The company believes the next two decades will be an unprecedented period for electricity build-out powered by data centers, electric vehicles, and other catalysts. As a leader in renewable energy development, Brookfield is in a perfect position to capitalize on this massive opportunity.
The potential to produce prodigious total returns
Brookfield Renewable pays a more than 4.5%-yielding dividend backed by a rock-solid foundation. It expects to increase that payout by 5% to 9% per year while growing its FFO per share at an even faster 10%-plus annual clip. These factors position the company to potentially generate an average annualized total return of 15% or more. That's fantastic return potential from such a low-risk investment opportunity, which is why investors should buy this stock like there's no tomorrow.
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Matt DiLallo has positions in Brookfield Renewable and Brookfield Renewable Partners. The Motley Fool has positions in and recommends Brookfield Renewable and Microsoft. The Motley Fool recommends Brookfield Renewable Partners and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
