Is Brookfield Renewable Partners (TSX:BEP.UN) Stock a Buy?

Should long-term dividend investors buy Brookfield Renewable Partners LP (TSX:BEP.UN)(NYSE:BEP) for an income portfolio?

| More on:

Hydrocarbon energy stocks got a limited boost last week, as geopolitical tension erupted in Iraq. However, new investors and veterans looking to swap out hydrocarbon for renewables have a potentially more sustainable source of capital growth in stocks such as Northland Power, Algonquin Power & Utilities, and Brookfield Renewable Partners (TSX:BEP.UN)(NYSE:BEP).

Renewables are becoming cheaper than oil

Capital efficiency is the bedrock of a sound economy, and renewables could provide a more sound foundation in this regard than fossil fuels. Amid heightening awareness and acceptance of the climate crisis, the green economy is emerging as a global megatrend with potentially vast upside this decade, with wind, solar, and hydro power overtaking fossil fuels.

Last year’s BNP Paribas report “Wells, Wires, and Wheels” concluded that “the economics of oil for gasoline and diesel vehicles versus wind- and solar-powered EVs are now in relentless and irreversible decline, with far-reaching implications for both policymakers and the oil majors.”

The International Energy Agency has forecast a supply glut in the black gold this year, notwithstanding OPEC’s intentions to counteract sustained lower oil prices through limiting output. Contrast this with the potential for further pipeline delays plus the threat of an oil bottleneck in the Persian Gulf as tensions flare, and you have a hydrocarbon environment racked with risk.

Waiting for bottlenecks is not a sustainable investment strategy. Sure, oil spiked 14% last September when 5% of the world’s supply got knocked out. But these events are rare and impact the broader economy. Throw in a weakening global economy lowering demand and American shale oversupply, and a permanently depressed hydrocarbon sector could hit energy investors later on in the year.

There are increasingly numerous reasons why a new energy investor might favour renewables over fossil fuels. Not least of these is the ongoing climate crisis. And even beyond the provisions being made by the energy industry to not only appear green but to affect real change, investors face an alternative energy sector that is experiencing rapid growth, as it becomes ever more cost competitive.

Brookfield Renewable Partners stock has gained 66.4% in the past 12 months, outpacing some of the biggest names in the oil industry. With its 4.8% dividend yield, Brookfield Renewable Partners can also hold its own when it comes to passive income.

A massive area of the world incorporating the Americas, Europe, and Asia is covered by Brookfield Renewable Partners. This can be broken down into some impressive capacities:

  • North America: 9,500 MW
  • South America: 4,800 MW
  • Europe: 4000 MW
  • Asia: 620 MW

The company is committed to growth, scaling up its Asia operations, and pumping $4 billion into its acquisition strategy.

The bottom line

Brookfield Renewable Partners is a strong buy for a multitude of good reasons. As the green energy trend continues to gain momentum, core stocks such as Brookfield Renewable Partners with its world-class asset-management expertise and impressive spread of operations are going to appreciate apace. While the value investor may want to wait for a dip, the growth investor might argue that there won’t be one.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Victoria Hetherington has no position in any of the stocks mentioned.

More on Dividend Stocks

hand stacks coins
Dividend Stocks

3 Ultra-High-Yield Dividend Stocks You Can Buy and Hold for a Decade

These three high-yield dividend stocks still have some work to do, but each are in steady areas that are only…

Read more »

senior man and woman stretch their legs on yoga mats outside
Dividend Stocks

TFSA: 2 Canadian Stocks to Buy and Hold Forever

Here are 2 TFSA-worthy Canadian stocks. Which one is a good buy for your TFSA today?

Read more »

calculate and analyze stock
Dividend Stocks

This 5.5% Dividend Stock Pays Cash Every Single Month!

This REIT may offer monthly dividends, but don't forget about the potential returns in the growth industry its involved with.

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

How to Use Your TFSA to Earn up to $6,000 Per Year in Tax-Free Passive Income

A high return doesn't mean you have to make a high investment -- or a risky one -- especially with…

Read more »

path road success business
Dividend Stocks

2 High-Yield Dividend Stocks to Buy Hand Over Fist and 1 to Avoid

High yields are great and all, but only if returns come with them. And while two of these might, another…

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

This 7% Dividend Stock Pays Cash Every Month

A high dividend yield isn't everything. But when it pays out each month and offers this stability, it's worth considering!

Read more »

young people stare at smartphones
Dividend Stocks

GST/HST “Vacation”: Everything Canadians Need to Know

The GST/HST "vacation" is a little treat for the holidays, along with a $250 payment. What should you do with…

Read more »

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Is CNR Stock a Buy, Sell, or Hold for 2025?

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »