This More Than 5%-Yielding Dividend Stock Looks Like a Can't-Miss Buy for Income and Upside Potential

There aren't a lot of can't-miss investing opportunities out there. However, Brookfield Renewable (NYSE: BEPC)(NYSE: BEP) certainly seems to be one of them. The leading global renewable energy company is capitalizing on the surging demand for clean power, which should continue for decades.

Few companies in the sector can match Brookfield's scale, expertise, and balance sheet strength. Those and other factors put it in a strong position to create a lot of value for investors in the coming years, which includes paying a lucrative and growing dividend (more than 5% current yield).

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A strong start to the year

Brookfield Renewable recently reported strong first-quarter results. The company generated a record $315 million, or $0.48 per share, of funds from operations (FFO). That was up 7% from the year-ago period and 15% after adjusting for the strength of its hydro generation last year.

The renewable energy company benefited from the stable, inflation-linked cash flows produced by its diversified global operating fleet of hydro, wind, solar, and energy storage assets. It also got a boost from its growth activities, which include its accretive capital recycling strategy. Brookfield routinely capitalizes on the value disconnect between its existing assets and higher returns on new investment opportunities.

For example, Brookfield and its partners have closed or agreed to sell $900 million of assets this year ($230 million net to Brookfield). Brookfield capitalized on strong demand from private investors for highly contracted renewable energy assets. It recently closed the sale of its interest in First Hydro at almost 3 times its invested capital and another 25% stake in the Shepherds Flat wind farm at almost 2 times its investment capital.

Brookfield is redeploying those proceeds into attractive new investment opportunities. The company recently agreed to buy National Grid's renewables platform. The fully integrated U.S. onshore operator and developer has 3.9 gigawatts (GW) of operating and under-construction assets, a 1 GW pipeline of construction-ready projects, and over 30 GW of primarily utility-scale solar and battery storage development projects. The company also closed the acquisition of the remaining interest in leading European renewable energy developer Neoen.

Built to thrive

Brookfield Renewable believes it's in a strong position to continue growing shareholder value in the future. The strong, growing demand for renewable energy is the foundation underpinning that belief. The company signed contracts to deliver an additional 4,500 gigawatt hours per year of generation during the first quarter.

That includes progress on delivering projects related to its massive renewable energy framework agreement with Microsoft. The company sees the initial 10.5 GW of capacity as the minimum it will deliver for the technology giant in the coming years. It's also seeing robust demand from other leading technology companies as they seek to power their cloud and artificial intelligence (AI) operations.

The company completed 800 megawatts of new renewable energy-generation capacity in the first quarter and is on track to complete 8 GW of projects this year. It's ramping to 10 GW of annual capacity additions, which it expects to reach in the coming years. These new projects will help grow the company's FFO at a mid-single-digit annual rate for years to come.

The company's large-scale and diversified global renewable energy platform of highly contracted and inflation-linked assets also puts it in a strong position for the future. It generates very durable and steadily rising cash flow that supports its high-yielding distribution and continued reinvestment in growing its portfolio.

Brookfield's scale gives it several other advantages. Its buying power enables the company to negotiate better terms with vendors and diversify its global supply chain. These factors help mute the impact of inflation and other cost pressures, like tariffs, on its development projects.

It also boasts one of the strongest financial profiles in the sector. It currently has about $4.5 billion of liquidity, which gives it lots of flexibility to continue investing money in the current environment. It routinely replenishes its available investment capacity by recycling capital.

High visibility into a high-powered growth rate

Brookfield Renewable expects its combination of organic growth drivers (inflation-linked rate increases, development projects, and other catalysts) and accretive acquisitions to drive 10%+ annual growth in its FFO per share through at least 2029, with increasing visibility through 2030. That easily supports the company's plan to raise its more than 5%-yielding dividend by 5% to 9% per year. This combination of income and growth could produce powerful total returns in the coming years, making Brookfield Renewable look like a can't-miss stock to buy for the long term.

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Matt DiLallo has positions in Brookfield Renewable and Brookfield Renewable Partners. The Motley Fool has positions in and recommends Microsoft. The Motley Fool recommends Brookfield Renewable, Brookfield Renewable Partners, and National Grid Plc and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.