Better Buy: Brookfield Renewable Stock, or BAM Stock?

Brookfield Asset Management (TSX:BAM) and Brookfield Renewable Partners LP (TSX:BEP.UN) have both been strong investments for Canadians, both benefiting from Brookfield’s extensive global infrastructure. BAM stock is now up about 16% in the last month as of writing, with BEP up 14% in that time.

BAM offers diversified exposure to asset management and financial services, providing stable cash flow from multiple sources. Meanwhile, BEP.UN focuses on renewable energy, which is gaining momentum due to global energy transition trends. But when it comes to further growth, which is the better buy? Let’s take a look.

BEP

Brookfield Renewable has been a standout player in the renewable energy space, establishing a solid track record of growth. A key moment in its journey was the acquisition of Saeta Yield in 2018, a leading developer of renewable power assets in Spain and Portugal. Since then, Brookfield has expertly managed the business, focusing on optimizing its portfolio, improving efficiency, and scaling up its renewable capacity.

Fast forward to 2024, Brookfield is now positioned to sell Saeta Yield to Masdar, a clean energy giant based in the United Arab Emirates (UAE). The deal, valued at approximately $1.4 billion, involves Masdar acquiring a 745 MW portfolio of utilized wind assets and a 1.6 GW development pipeline in Spain and Portugal. Brookfield’s successful execution of its business plan over the past six years has made this transaction one of the largest renewable energy deals in the Iberian Peninsula. The sale aligns with Brookfield’s strategy of recycling capital to fuel new growth activities, keeping its momentum strong.

Looking ahead, Brookfield Renewable is well-positioned for continued success, especially with its forward-thinking asset rotation strategy and ability to adapt to evolving market conditions. With the global shift towards net-zero goals and renewable energy expansion, Brookfield’s focus on sustainable energy projects offers strong long-term growth potential. As the energy transition accelerates, Brookfield remains at the forefront, ready to capitalize on new opportunities across various regions. All while retaining part of Saeta’s regulated solar assets to continue its presence in the Iberian market.

BAM

BAM has long been recognized for its ability to deliver strong and consistent returns, driven by its diversified portfolio across real estate, infrastructure, renewable energy, and private equity. Over the years, BAM has cemented its reputation by strategically investing in high-quality assets and focusing on long-term value creation. Its ability to manage assets on behalf of institutional investors has provided a stable income stream, allowing it to continue growing even in challenging economic times.

In the most recent quarter, BAM continued to impress with solid earnings growth. Its diluted earnings per share (EPS) increased by 13.8% year-over-year, with net income reaching $443 million. This growth is supported by the company’s focus on expanding its asset management business. The business now boasts over $825 billion in assets under management. Its dividend yield, currently at 3.2%, also makes it an attractive option for income-seeking investors. With a forward price/earnings (P/E) ratio of 25.6, BAM is trading at a valuation that reflects its steady growth and income potential.

Looking ahead, BAM’s future outlook remains bright. The company is well-positioned to capitalize on the growing global demand for infrastructure, real estate, and renewable energy investments. Its diversified approach means it can adjust to different economic cycles and market trends. All while continuing to deliver value.

Bottom line

Both BAM and BEP are strong contenders. But if you’re looking for a bit more stability and diversification, BAM might have the edge. As a global asset manager, BAM’s broad exposure to real estate, infrastructure, and renewable energy means it’s less dependent on any one sector’s performance. Meanwhile, BEP offers a focused play on the renewable energy boom. While this is exciting, it comes with more volatility tied to the energy markets. If you want diversified growth and steady income, BAM could be the better buy.