Brookfield Renewable Partners (NYSE: BEP) is a Quebec based open-ended income trust with a market cap of almost $5 billion. The company has seen its stock price do nothing over the past four years. However, the company has strong growth potential and offers investors a growing dividend of more than 6%. Combining these things, we will see how Brookfield Renewable Partners is a strong investment at the present time.
Brookfield Renewable Partners was originally listed on the Toronto Stock Exchange in 1999 as the Great Lakes Hydro Income Fund. The company is 62.5% owned by Brookfield Asset Management (NYSE: BAM), an investment company with a market cap of almost $33 billion. Brookfield Renewable Partners is essentially a company that owns renewable energy assets and uses them to provide growing cash flow to investors.
Over the past five years, the S&P 500 (NYSEARCA: SPY) has seen its stock price go up by more than 75%. At the same time, Brookfield Renewable Partners has seen its stock price stay fairly constant having gone up just 10%. However, Brookfield Renewable Partners is not a company for rapid capital gains. Instead, the company pays out cash, and has increased its dividend from $0.36 per quarter in 2013 to $0.45 per quarter in the most recent quarter, a 25% growth.
Brookfield Renewable Partners Portfolio Overview
Now that we have a small introduction to Brookfield Renewable Partners along with a discussion of the company's recent stock price and dividend performance, let's delve into a deeper overview of Brookfield Renewable Partners portfolio.
Brookfield Renewable Partners is one of the largest pure-play renewable businesses in the world with a market cap of almost $4.9 billion and 100 years of experience in power generation. At the same time, the company has the operating, development, and market capabilities that come with this along with 2000 employees. This shows how Brookfield Renewable Partners is a large leader in its field.
This dominance is visible through Brookfield Renewable Partners $25 billion in power assets spread across 260 power generating facilities. These facilities mean that Brookfield Renewable Partners has 10.7 gigawatts in generating capacity of which an astounding 88% is hydroelectric generation. Spread across 7 countries, this helps to show how Brookfield Renewable Partners is an enormous renewables business.
As the premier company in this space, that means that Brookfield Renewable Partners has the ability to expand and dominate the growth of this sector.
Brookfield Renewable Partners Asset Distribution - Brookfield Renewable Partners Investor Presentation
This shows an overview of Brookfield Renewable Partners portfolio as spread out across the world. The company has ~$16 billion of assets under management in North America with a further ~$8 billion in South America spread across Colombia and Brazil. The company also has $1 billion of assets under management in Europe. Overall, the company has $25 billion of well-distributed assets.
As we can see the majority of Brookfield Renewable Partners assets are spread across North and South America, both enormous energy markets. These enormous markets also consist of well spread out populations with enormous renewable markets. North America is growing into one of the largest sources of solar and wind power in the world while South America is one of the largest sources of hydropower in the world.
Brookfield Renewable Partners Energy Profile - Brookfield Renewable Partners Investor Presentation
Not only does Brookfield Renewable Partners have an impressive portfolio valued at $25 billion with 10.7 gigawatts of generation potential, but the company also has strong contracts for its portfolio. 90% of the company's renewable energy portfolio is contracted out with a 16 year term and an inflation-linked escalation potential. That means that not only does the company have an impressive portfolio but it will continue to earn investors long-term inflation adjusted income.
On top of this, the company is focused on high-yield investments. As one of the fastest growing companies in a rapidly growing field, the company has its pick and choice of investments and can choose investments with strong cash margins. On top of this, the company has more than $1 billion in available liquidity and a investment grade credit rating. This means that Brookfield Renewable Partners has the financial strength to expand in this market.
This shows how Brookfield Renewable Partners has an impressive portfolio with significant generation potential. At the same time, the company has contracts that can provide long-term earnings and a significant amount of liquidity. This shows how the company's portfolio is impressive at the present time.
Brookfield Renewable Partners Earnings Growth
So far we have a detailed discussion of Brookfield Renewable Partners including how the company has a valuable and well spread out portfolio. At the same time, the company has a long-term contracts that will provide it with long-term inflation adjusted income and has its choice of investments. Now we will see how this portfolio and the company's financials will turn into long-term earnings for investors.
Brookfield Renewable Partners Growth - Brookfield Renewable Partners Investor Presentation
Brookfield Renewable Partners has a $9 billion market capitalization and a very respectable dividend yield of 6% in the present dividend environment. At the same time, since 2011, the company has increased its annual distribution by 6.9% annually developing even higher returns to investors. As a result over a 5 year period, the company has provided a 10% total return.
Over the long-term, Brookfield Renewable Partners hopes to deliver investors long-term returns of 12-15%. Compared to the S&P 500 that has been growing at the high single-digits over the long-term, Brookfield Renewable Partners is a strong investment. In the rapidly growing renewables market, this shows Brookfield Renewable Partners dedication to increase investor earnings.
Brookfield Renewable Partners Balance Sheet - Brookfield Renewable Partners Investor Presentation
Brookfield Renewable Partners anticipates that on top of long-term income, supported by valuable contracts, the company will achieve mid to high-single digit earnings growth supported by organic cash flow and proprietary project development. The company has an investment grade balance sheet and manages sales to benefit from market volatility.
At the same time, Brookfield Renewable Partners plans to leverage its established platforms and will continue to focus on hydro opportunities. While large scale hydro opportunities are harder to find than say large scale solar opportunities in a desert, these are low cost opportunities. The company's continued focus on such opportunities will provide it with long-term growth.
This shows that not only does Brookfield Renewable Partners offer investors a respectable dividend, but the company has the ability to grow these dividends.
Brookfield Renewable Partners has seen its stock price do much of nothing over the past few years while the company has continued to pay investors a respectable and growing dividend of more than 6%. At the same time, the company has an impressive portfolio worth $25 billion with more than 10.7 gigawatts of power generating capacity. The company has a strong and well spread out portfolio in major markets.
Brookfield Renewable Partners, on top of this impressive and consistent dividend, has been increasing this dividend. The company has contracts for its present assets to increase earnings at the rate of inflation. At the same time, the company has an investment grade credit rating and minimal debt. This means that the company can take advantage of a growing renewable market to increase future earnings.
As we can see here, Brookfield Renewable Partners offers investors a growing dividend of more than 6% and at the same time has strong growth potential from the renewables market. This shows how the company is a strong investment at the present time.
Disclosure: I am/we are long BEP, BAM, SPY.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.