Key Points
The world will need a lot more power in the future.
Brookfield Renewable is a leader in operating and developing clean power.
The company could generate powerful total returns in the coming decades.
- 10 stocks we like better than Brookfield Renewable ›
If Hollywood remade The Graduate today, the film's famous lines by Mr. McGuire to Benjamin would likely have a different ending. Today's dialog would probably go something like, "I just want to say one word to you. Just one word...Power." That's because the world needs a tremendous amount of new power-generating capacity to support the transition to electric vehicles, operate new automated industrial manufacturing facilities, and support power-hungry AI data centers.
Brookfield Renewable (NYSE: BEPC)(NYSE: BEP) is a global leader in operating and developing clean power assets. That puts the company in a strong position to generate supercharged total returns for its investors. It drives my view that an investment in the leading renewable energy stock could set you up for life.
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The power leader
Brookfield Renewable operates a leading globally diversified portfolio of clean power assets. Its platform spans hydroelectric, wind (onshore and offshore), utility-scale solar, distributed energy (power produced onsite, such as rooftop solar systems), and battery storage. It owns assets across North and South America, Europe, and Asia. Brookfield also has an investment in nuclear services leader Westinghouse.
The company's leadership in operating and developing clean power assets has made it the strategic partner of choice for the world's biggest technology companies. Brookfield is collaborating with Microsoft to deliver over 10.5 gigawatts of new renewable energy capacity in the U.S. and Europe between 2026 and 2030 to support the tech titan's cloud and AI operations. The massive deal is almost eight times larger than the biggest single corporate power purchase agreement (PPA) ever signed. Brookfield also signed the world's largest corporate clean power deal for hydroelectricity with Google at up to 3 GW.
Meanwhile, the U.S. government formed a strategic partnership with Westinghouse to accelerate the deployment of nuclear power. The U.S. will help support the construction of at least $80 billion in new nuclear reactors across the country, using Westinghouse's technology to meet AI's electricity needs.
Powerful total return potential
Brookfield Renewable has multiple growth drivers. Most of its PPAs link power rates to inflation, while the company routinely signs new PPAs at higher rates as legacy contracts expire, such as its hydropower deals with Google. Additionally, it has a massive backlog of renewable energy projects under development and routinely makes value-enhancing acquisitions.
The company estimates that these catalysts will power more than 10% annual growth in its funds from operations per share through at least 2030. That easily supports the company's plans to increase its nearly 4%-yielding dividend by 5% to 9% each year. This growth and income combo could enable Brookfield to generate total annualized returns in the mid-teens. That's at least as good as its historical annual average of more than 13% over the past decade.
A potentially life-changing investment
Brookfield's high-powered total return potential could set you up for life. For example, a $25,000 investment today would grow into nearly $1 million in 30 years at a 13% average annual rate of return. Meanwhile, a $5,000 investment today, combined with $2,500 in additional annual contributions, would grow to more than $925,000 in that same time frame at that annualized return. Given the growth ahead for power, Brookfield could potentially exceed this return level, which drives my prediction that an investment today could set you up for life.
Should you buy stock in Brookfield Renewable right now?
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Matt DiLallo has positions in Alphabet, Brookfield Renewable, and Brookfield Renewable Partners. The Motley Fool has positions in and recommends Alphabet and Microsoft. The Motley Fool recommends Brookfield Renewable and Brookfield Renewable Partners. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
