Should You Buy Brookfield Renewable Corporation While It's Below $40?
Key Points
Few clean energy providers can match Brookfield Renewable's scale.
The company offers an attractive and growing distribution.
Brookfield Renewable is well-positioned for growth with two historic deals with tech giants Microsoft and Google.
Some stocks zig while other stocks in the sector zag. That's what has happened with Brookfield Renewable Corporation (NYSE: BEPC) in recent weeks. While most energy stocks have soared as oil and gas prices rose in the wake of the military conflict with Iran, its shares have fallen by more than 10% from their previous high.
The last time the stock pulled back to around the current level, it soon rebounded. Should you buy Brookfield Renewable Corporation stock while it's below $40?
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A lot to like about Brookfield Renewable
Investors have a lot to like about Brookfield Renewable Corporation. For one thing, the stock doesn't have the tax complications associated with its limited partnership sibling, Brookfield Renewable Partners (NYSE: BEP). The two stocks have different structures but share the same underlying business.
Brookfield Renewable announced a massive 10.5-gigawatt agreement with Microsoft (NASDAQ: MSFT) in May 2024 -- the largest renewable energy deal in history by far. The company is expected to begin delivering renewable power to Microsoft this year.
Last year, Brookfield Renewable signed a deal with Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) unit to deliver up to 3 gigawatts of hydroelectric power. This marked the largest-ever agreement for the purchase of hydroelectric power.
AI data centers are driving demand for more electric power. Few clean energy companies match Brookfield Renewable's scale. The company's current capacity exceeds 47 gigawatts, while its development pipeline includes another 227.4 gigawatts.
Brookfield Renewable isn't only a hydro, wind, and solar energy provider. The company's stake in Westinghouse also makes it a major player in the resurgent nuclear energy industry.
No discussion of this renewable energy stock would be complete without mentioning its distribution. Brookfield Renewable's forward yield is around 4%. The company recently announced a 5% increase in its distribution and expects to continue growing the distribution by 5% to 9% per year.
Image source: Getty Images.
Buy on the dip?
One potential issue for Brookfield Renewable is the possibility that the Federal Reserve could be forced to raise interest rates if inflation jumps further. The good news is that the average maturity of the company's debt is at least 10 years out. Also, most of the debt is fixed-rate, which means a temporary bump in interest rates shouldn't be too problematic.
Should investors buy Brookfield Renewable Corporation stock on the dip? I think so. This renewable energy leader should deliver double-digit total returns over the long term. The recent pullback presents an attractive buying opportunity, in my view.
Should you buy stock in Brookfield Renewable right now?
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Keith Speights has positions in Alphabet, Brookfield Renewable, Brookfield Renewable Partners, and Microsoft. 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.
