1 High Yield Dividend Share To Buy Like There’s No Tomorrow

Brookfield Renewables (BEPC -0.10%) (BEP 0.38%) has an excellent history of paying dividends. The leading global renewable energy producer has increased its payout by 6% year over year over the past two decades. It has increased its payout by at least 5% for 13 years in a row.

The company is just getting started. It has several catalysts that should come together to deliver 10%-plus annual growth in funds from operations (FFO) per share until at least 2028. That would easily give it the strength to support a plan to raise its dividend by 5% to 9% annually. Since Brookfield Renewable already offers a high-yield payout (over 4.5%), it should have the fuel to generate supercharged total returns in the coming years.

Built on a solid foundation

Brookfield Renewable operates one of the world’s largest publicly traded renewable energy platforms, with hydro, wind, utility-scale solar, distributed energy and storage assets in all major markets that have the ability to produces 34 gigawatts (GW) of power. It also has a growing portfolio of sustainable solutions, such as biofuel production, recycling, carbon capture and storageand nuclear services. These assets generate predictable, stable cash flow, supported by long-term contracts with utilities and large corporations.

Most contracts are indexed to inflation (70% of Brookfield’s revenues). For this reason, they should provide the company with stable and growing cash flow. Brookfield expects its FFO per share to increase by 2% to 3% annually due to escalating inflation alone.

The company paid out less than 75% of its stable cash flow in dividends in the first half of this year. That gave it a solid cushion and allowed it to retain cash to help fund further expansion.

Brookfield also has very strong balance sheet. It has an investment loan and uses primarily long-term, fixed-rate debt to finance its operations. The company also has a lot of liquidity, which one is that regularly supplemented by recycling capitalAt the end of the second quarter, the company had $4.4 billion of available liquidity and expected asset sales to generate $1.3 billion of net income this year.

Very visibleprospects for major growth

Escalating inflation is one of several growth drivers for Brookfield. The company also expects margin-enhancing moves, such as providing ancillary services to existing customers, to add another 2% to 4% to its FFO per share each year. That’s 4% to 7% annual growth without investing capital.

And Brookfield Renewable can grow at a steady pace without investing capital, currently expects to invest $7 billion to more than $8 billion over the next five years in high-return growth projects and accretive acquisitions. The company has absolutely a huge pipeline of renewable energy projects in its backlog (a staggering 200 GW in various stages of development). This pipeline supports its view that it can develop around 10 GW of projects per year for the next few years. These projects will help to increase its FFO per share by an additional 3% to 5% per year.

It recently signed a massive 10.5 GW project development deal for a tech giant Microsoft between 2026 and 2030 to support cloud and artificial intelligence (AI) development. It was the largest electricity purchase agreement in corporate history (almost eight times the previous record).

Meanwhile, Brookfield expects to continue its accretive acquisitions. For example, the company and its partners recently agreed to acquire a majority stake in Newlywedsleading global renewable energy platform headquartered in France. The company expects to close a majority investment and then buy out the rest of Neoen from the remaining investors. This deal will add a large-scale operating platform (8 GW of assets in operation and under construction) and a large pipeline of projects in advanced stages (20 GW).

The company also recently made his first investment in South Korea and expanded its leading platform in India. These and future transactions should help drive FFO growth rates above 10% per year.

Brookfield Renewable could expand at a solid pace for years, if not decades. The company believes that the next two decades will be some unprecedented period for the construction of the electricity network powered by data centers, electric vehicles, and other catalysts. As a leader in the development of renewable energy sources, Brookfield is ideally positioned to capitalize on this tremendous opportunity.

The ability to generate huge total returns

Brookfield Renewable pays more than 4.5%-profitable dividend backed by a solid foundation. This payout is expected to grow by 5% to 9% per year, while increasing FFO per share at an even faster rate of 10% or more per year. These factors position the company to potentially generate an average annual total return of 15% or more. That’s a fantastic return potential for such a low-risk investment opportunity, Which is why investors should buy these stocks like there’s no tomorrow.

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