Predicted Top Energy Stock for Purchase in 2025
In the rapidly advancing digital world, energy demand is soaring, especially for lower-carbon energy sources. This surge is crucial to fuel our escalating digital economy, with data centers, particularly those supporting AI applications, consuming an increasing share of global electricity. By 2030, these centers are anticipated to consume 3-4% of the world's electricity, driving considerable demand growth for natural gas, renewable energy, and nuclear power.
Leading the charge in this lower-carbon energy revolution is Brookfield Renewable (BEPC 0.87%, BEP 0.13%). As a global powerhouse in renewable energy production, Brookfield boasts a whopping 37 gigawatts (GW) of renewable energy capacity across the globe, annually offsetting 250 million tonnes of carbon emissions. Besides generating renewable energy, its sustainable solutions arm invests in carbon capture, biofuels production, advanced recycling, and nuclear services. With Westinghouse Electric Stock and its growing carbon capture and storage business, Brookfield Renewable is primed to thrive in the coming years.
Brookfield Renewable excels in generating steady cash flow through the power it produces and the sustainable solutions it provides. Nearly 90% of its power contracts are under long-term, fixed-rate agreements, ensuring income stability. These agreements typically index 70% of revenue to inflation, further bolstering Brookfield's finances.
Dividend investors will appreciate Brookfield Renewable's robust cash flow. The company distributes a substantial portion of its income to shareholders, offering a dividend yield of around 5%. Over the past two decades, this payout has grown at a steady 6% annual rate.
Brookfield Renewable expects to increase its funds from operations (FFO) per share at a remarkable 10%+ annual rate over the next decade. This spurt in growth will further solidify its plan to raise its dividend by 5-9% yearly for the foreseeable future.
Brookfield Renewable's growth is underpinned by several factors. First, its existing power contracts' inflation escalation clauses provide a steady 2-3% increase in FFO per share yearly. Second, as legacy agreements expire, the company will likely lock in higher power rates, contributing another 2-4% annual increase in FFO per share.
Future growth prospects extend beyond its existing portfolio, with over 200 GW of potential renewable energy projects in its pipeline and 65 GW in advanced-stage development. This projects' delivery could add up to 4-6% annually to the company's FFO per share.
Furthermore, current projects with large corporate power buyers provide ample support. For example, a framework agreement with Microsoft provides Brookfield with 10.5 GW of capacity to fuel its growing cloud and AI operations.
Finally, Brookfield Renewable has a remarkable track record of making accretive acquisitions that enhance its profits and prospects. Recent agreements to acquire Neoen, a leading European renewable energy developer, indicate the company's aggressive expansion plans.
Brookfield Renewable boasts a strong investment-grade balance sheet, with robust liquidity supporting its future growth engagements. Its asset recycling and sales generate substantial returns, with $2.3 billion in cash from asset sales this year and several other deals in the pipeline.
All told, Brookfield Renewable's diverse renwable energy assets and sustainable solutions generate steady cash flow for a solid 5% dividend yield. With an investment-grade balance sheet and a growth rate that easily supports future dividend raises, Brooklyn Renewable is poised to deliver attractive total returns in the mid-teens. As the demand for lower-carbon energy continues to surge, Brookfield Renewable stands out as a top energy stock pick for 2025 and beyond.
- Brookfield Renewable, with a focus on lower-carbon energy sources, aims to decrease its reliance on traditional energy sources by investing in renewable technologies, such as wind and solar, by 2025.
- To attract investors seeking sustainable investment opportunities, Brookfield Renewable plans to allocate a significant percentage of its funds towards developing and implementing renewable energy projects, aiming for a 4-6% annual increase in its funds from operations (FFO) per share.
- As one of the global leaders in renewable energy production, Brookfield Renewable is looking to expand its influence in the market, profiting from the increasing global demand for renewable energy, which is expected to consume 3-4% of the world's electricity by 2030.
- To profit from this expanding market, Brookfield Renewable has invested in Brookfield Business Partners and Brookfield Asset Management, which have a focus on renewable energy infrastructure and mining technology, respectively, which could contribute to the company's overall revenue growth in the coming years.
