2 Renewable Energy Stocks to Buy for All TFSA & RRSP Investors

Brookfield Renewable Partners LP (TSX:BEP.UN)(NYSE:BEP) is the perfect RRSP option in Canada and TFSA investors can buy the success with this related stock.

| More on:

Your Canada Pension Plan payments will likely not be enough for you to retire comfortably in Canada and maintain your current lifestyle. Thankfully, the Canada Revenue Agency has many options for you to save and grow money on a tax-free basis.

The Bermuda-based Brookfield Renewable Partners LP (TSX:BEP.UN)(NYSE:BEP) is the perfect option for your Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP), depending on the other assets you currently own.

Double your stock market returns with Brookfield Asset Management

If you’re looking for stocks to buy for your TFSA or RRSP, you may be like many other Canadians who prefer to profit from Brookfield’s renewable energy investments through shares in the parent company, Brookfield Asset Management Inc (TSX:BAM.A)(NYSE:BAM).

Brookfield Asset Management is the best option for your TFSA because the robust and untaxed capital gains will grow your wealth faster than the S&P/TSX Composite Index. You’ll also be able to withdraw the money at any time without it increasing your taxable income for the year.

In the past 10 years, the stock price on Brookfield Asset Management has appreciated by nearly 500%. This dividend-paying stock has a history of returning substantial capital gains on the Toronto Stock Exchange. When you retire 10 years from now, your initial investment will be safe in this stock.

  BAM.A Chart

Brookfield Asset Management is the parent company of Brookfield Renewable Partners Limited Partnership. As such, you will receive the strong growth in the renewable energy sector along with the safety of a diversified asset management company with investments in real estate, finance, and infrastructure.

The five-year average dividend yield on Brookfield Asset Management stock is 1.36%, and the 52-week change in price is 47.19%. With a 6.89% return on equity and a positive profit margin of 5.55%, you can’t go wrong with this stock.

The next decade will be a winner for renewable energy stocks

Over the next decade, renewable energy will be one of the biggest winners in the stock market equities. Oil and natural gas are quickly fading in appeal in favour of green energy alternatives. Every Canadian should have at least one renewable energy stock in their retirement portfolio.

 BAM.A Chart

Brookfield Asset’s subsidiary, Brookfield Renewable Energy, is a limited partnership designed to hold Brookfield’s renewable energy investments. Thus, Canadian investors might need to file a Schedule K-1 every year.

Unlike other Brookfield limited partnerships, the company is based in Bermuda, which means that Canadians will never owe any U.S. income tax liabilities from owning units of Brookfield Renewable Partners.

Consider the industry allocations within your entire retirement portfolio

Brookfield Asset Management is the clear long-term winner, especially as it gives investors access to the returns of the whole Brookfield portfolio. Moreover, as it requires less paperwork, the tax implications of the stock versus the subsidiary are easier to understand.

Depending on the composition of your retirement portfolio and the proportion of various industries such as real estate and finance within all of your assets, you may want to stick with Brookfield Renewable Partners to avoid overweighting your portfolio with these industries. Otherwise, most Canadians will want to stick with the parent company, Brookfield Asset Management.

Owning the parent company still gives you access to the returns from Brookfield Renewable Partners, along with higher historical capital gains from diverse industries.

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 Debra Ray has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Brookfield Asset Management. The Motley Fool recommends BROOKFIELD ASSET MANAGEMENT INC. CL.A LV.

More on Dividend Stocks

Canadian dollars are printed
Dividend Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Toronto-Dominion Bank (TSX:TD) stock could do well in the year ahead.

Read more »

monthly desk calendar
Dividend Stocks

Monthly Income: Top Dividend Stocks to Buy in November

Here are two of the best monthly dividend stocks in Canada you can buy in November 2024 and hold for…

Read more »

profit rises over time
Dividend Stocks

These 2 Dow Stocks Are Set to Soar in 2025 and Beyond

Two Dow Jones stocks are screaming buys but Canadians must hold them in an RRSP or RRIF to avoid paying…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Use Your TFSA to Earn Ultimate Passive Income

If you have a TFSA, then you have the key to creating ultimate passive income. All you need is a…

Read more »

Confused person shrugging
Dividend Stocks

Better Buy: Fortis Stock or Hydro One Stock?

Let's do a compare and contrast of these two top utilities stocks right now, shall we?

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

Boost Your Passive Income: 2 Canadian High-Yielders at a Bargain

Nutrien (TSX:NTR) stock and another play that appear like fantastic dividend bargains in mid-November.

Read more »

3 colorful arrows racing straight up on a black background.
Dividend Stocks

TSX Stocks Soaring Higher With No Signs of Slowing

Three TSX stocks continue to beat the market and could soar higher in an improving investment landscape.

Read more »

Hourglass and stock price chart
Dividend Stocks

Goeasy Stock: Is It Heading for a 52-Week High?

Goeasy stock has been edging higher, especially after another record-setting earnings report. So are 52-week highs in sight?

Read more »