Brookfield Renewable Partners (TSX:BEP.UN) has been steadily proving that clean power isnât just a feel-good investment. It can also be a powerful driver of long-term returns. Over the past year, the dividend stock weathered interest rate headwinds and volatility in renewable generation. Yet its latest results show a business hitting its stride in a market where demand for green energy is set to soar.
Into earnings
In its most recent quarter, the dividend stock reported record funds from operations of $371 million, up 10% year over year, or $0.56 per unit. That performance was underpinned by strong operating results across its diversified portfolio, which spans hydro, nuclear, wind, solar, and battery storage. While the dividend stock still posted a net loss of $112 million due to non-cash expenses, the cash flow growth is what really matters for investors looking for income and expansion potential.
One of the most eye-catching developments was Brookfield Renewableâs first-of-its-kind hydro agreement with Google to deliver up to 3,000 megawatts of capacity in the U.S. Itâs not just a big contract, itâs the largest framework agreement for the purchase of hydroelectricity ever signed. This deal, along with a separate 10,500-megawatt renewable supply agreement with Microsoft last year, underscores how Brookfield is positioning itself as the go-to partner for major tech companies racing to secure reliable, clean power for data centres and artificial intelligence (AI) growth.
Staying strong
Operationally, the hydroelectric segment was a standout, delivering $205 million in FFO, up over 50% from last year as water levels rebounded. Its distributed energy, storage, and sustainable solutions segment also surged, with a near 40% boost in FFO driven by growing demand for nuclear energy through its Westinghouse business. These gains offset more modest contributions from wind and solar, where asset sales trimmed output but were part of a deliberate capital recycling strategy.
That asset rotation is a defining feature of Brookfield Renewableâs model. In this quarter alone, the dividend stock generated about $1.5 billion in expected proceeds from sales, including stakes in hydro and wind projects at attractive valuations. By locking in gains and redeploying into higher-return opportunities, it keeps growth moving without overextending its balance sheet. Liquidity now stands at $4.7 billion, giving the dividend stock plenty of room to keep investing in large-scale projects.
Considerations
Of course, itâs not all smooth sailing. The dividend stock carries more than $38 billion in debt, which makes financing costs and interest rate trends important to watch. And while its mix of technologies helps mitigate resource risk, renewable output can still fluctuate from quarter to quarter. Investors also need to remember that its payout ratio looks high on a net income basis because of those non-cash charges, even though cash flow supports the distribution.
Still, for income seekers, the 6% forward yield is appealing, especially with management targeting 5% to 9% annual distribution growth. The fact that these payouts are underpinned by long-term contracts with inflation-linked pricing makes them more resilient than many in the renewable space. So right now, investors who have $10,000 to invest would gain around $617 each year at writing.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| BEP.UN | $33.48 | 298 | $2.07 | $616.86 | Quarterly | $9,969.04 |
Bottom line
The bigger picture is that Brookfield Renewable is at the intersection of two unstoppable trends. These are the global shift to clean energy and the explosion in electricity demand from digital transformation. Its scale, technology mix, and deep relationships with the worldâs biggest power buyers give it a competitive edge. One thatâs hard to replicate.
If youâre looking for a TSX-listed ESG play that combines income, growth, and leadership in critical energy infrastructure, Brookfield Renewable Partners could be the green gem worth holding for the long run. The market may not fully appreciate the value of its recent deals and strategic positioning yet. But as those contracts turn into cash flow, the upside could be just as powerful as the energy it delivers.
The post This TSX ESG Leader Might Be Your Portfolio’s Green Gem appeared first on The Motley Fool Canada.
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Fool contributor Amy Legate-Wolfe has positions in Microsoft. The Motley Fool recommends Alphabet, Brookfield Renewable Partners, and Microsoft. The Motley Fool has a disclosure policy.
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