Brookfield Renewable Stock Analysis – A Top Clean Energy Investment
As far as clean energy investments go, Brookfield Renewable stock (NYSE: BEP) is on the top of investor’s lists. This after yet another solid financial performance in the second quarter. Brookfield Renewable Partners is a leader in striving for a cleaner, more sustainable environment.
Renewable energy stocks are trending again on Wall Street. New policies and incentives continue to encourage clean energy initiatives.
The U.S Bureau of Land Management recently announced it will be updating its renewable energy permitting regulations. The department is focused on cutting costs related to solar and wind power. This is one example of how the U.S. is making it easier for companies to start wind and solar projects… Making up part of a much broader plan.
These developments are exciting news for Brookfield Renewable investors. Brookfield continues to capitalize on these incentives. And all the while, it’s expanding its operations. Let’s take an in-depth look at what investors can expect from Brookfield renewable stock.
Brookfield Renewable Stock: Business Developments
Brookfield Renewable is in a prime position right now. It’s poised to take advantage of the expanding renewable energy sector. However, BEP has underperformed this year. It’s currently at -6% YTD. However, investors have plenty to look forward to.
The company is capable of generating over 20,000 MW of clean energy from sources including:
- Hydroelectric
- Wind
- Solar
- And distributed generation
The company operates about 6,000 facilities on four continents in North America, South America, Europe, and Asia. Also, with the influx of new investments, Brookfield Renewable stock is optimally positioned.
Meanwhile, here are some of the business developments Brookfield Renewables has in the works:
Shepherds Flat Wind Farm
Shepherds Flat wind farm in northern Oregon is one of the most significant onshore wind projects in the United States. As a result, Brookfield Renewable Partners agreed to buy it out for $700 million in December 2020. In addition, Southern California Edison agreed to purchase power from the wind farm for the next 20 years.
The reopening is expected to increase energy production at the 845 MW wind farm by about 25%. For instance, projects like Shepherds Flat will help Brookfield’s portfolio. And for a fraction of the cost.
Strategic Amazon Partnership
At this point, any partnership with Amazon (NASDAQ: AMZN) seems to be good news for investors. Amazon is the world’s largest corporate buyer of renewable energy. Thus, Brookfield is once again poised for another excellent return on its investment.
The partnership aims to develop new renewable energy projects. Locations include Brazil, Asia, North America, and Europe. This puts Brookfield in a great position to continue selling energy to Amazon.
Investment in China’s Wind Portfolio
Brookfield continues to make smart decisions that have produced big results. The investment joins Apple’s China Renewable Energy Fund to support the country’s transition to net zero.
The joint investment takes a 55% stake in China’s wind portfolio. And this is capable of producing 213 MW of energy.
Trane Technologies Partnership
Trane Technologies (NYSE: TT) is an innovative manufacturing company focused on building a better future. Brookfield and Trane recently joined forces. The partnership aims to help customers meet their energy goals through decarbonization-as-a-service.
The service is capable of creating a new revenue stream as the product opens a new market that could be worth $600 billion in the future.
Brookfield Renewable Stock: Financial Performance
Brookfield’s second quarter results show the investments are starting to pay off. As renewable demand increases, Brookfield has made wise investment and partnership decisions. These choices have put Brookfield in a superior position to sustain financial growth. Here are a few highlights from the report:
- Strong Balance Sheet – Fitch initiated coverage on Brookfield with a BBB+ credit rating. The company also has $3.3 billion in available liquidity.
- Continued Expansion – 28 new agreements signed worth nearly 800 GWh of renewable energy. Also signed a new contract worth about 1.5 GW of offshore wind energy at the Polish renewable business.
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Financial Growth – Normalized funds from operations increased 23% year-over-year. The growth can be attributed to the company’s new asset, Shepherds Flat wind farm. Also Brookfield’s increased stake in TerraForm Power (NASDAQ: TERP).
- High Dividend – Distributions increased 5% YOY to $0.30 or $1.215 annually. The YTD payout ratio is currently at 72% of total funds from operations (Target rate = 70%).
Overall, Brookfield had another solid quarter showing the company is growing rapidly.
The Future of BEP
Looking ahead, it seems like Brookfield Renewable Partners is doing a lot right. With new partnerships and projects on the way, growth seems inevitable for Brookfield Renewable stock.
BEP stock is down over 5% in 2021, currently sitting around $40 per share. But that shouldn’t discourage investors. Brookfield renewable partner’s stock has returned more than 200% over the past two years.
In short, the demand for renewable energy continues to increase. And Brookfield has the right technology and strategy for this opportunity. The key to Brookfield’s growth will be fending off the incoming wave of competition in the renewable energy sector.
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About Pete Johnson
Pete Johnson is an experienced financial writer and content creator who specializes in equity research and derivatives. He has over ten years of personal investing experience. Digging through 10-K forms and finding hidden gems is his favorite pastime. When Pete isn’t researching stocks or writing, you can find him enjoying the outdoors or working up a sweat exercising.