Best Energy Stocks to Invest $1,000 Now

Brookfield Renewable (BEPC -1.97%) (BEP -2.86%) has been a powerful wealth creator since its founding in 2011. The renewable energy producer delivered a total return of 12.2% per year over this period. This turned his $1,000 investment into more than $4,500. The company has grown its funds per share (FFO) at more than 10% annually, allowing it to increase its dividend by at least 5% each year.

The company has the potential to generate even stronger profits in the future. Because of its potential, the company stands out as one of the best energy stocks to invest $1,000 in right now.

lucrative source of income

Brookfield Renewable currently offers a very attractive dividend yield of 6%. At that rate, a $1,000 investment could turn into $60 in dividend income per year.

of renewable energy company The lucrative dividend is built on a very sustainable foundation. Driving that view is very resilient cash flow. The company has fixed prices for 90% of the electricity it generates under long-term power purchase agreements. public works and large corporate buyers. The company ties 70% of its revenue to inflation, reinforcing the view that this will lead to growth in the existing portfolio. FFO 2% to 3% per share per annum. Meanwhile, FFO per share is expected to increase an additional 2% to 4% annually due to margin-enhancing activities such as sales of ancillary products.

In addition to stable and increasing cash flow, Brookfield has a strong balance sheet. The company has an investment grade credit rating (BBB+) and fixed rate debt with no significant short-term maturities. The company also has significant corporate liquidity and partner capital through investment funds it manages.

Strong future growth

Brookfield Renewable has significant growth potential. The built-in growth drivers of inflation indexing and margin expansion result in very solid underlying growth rates.

In addition to that, the company has a large development pipeline. Brookfield Renewables last year completed 155 gigawatts (GW) of renewable energy projects in various stages of development, including 24 GW in advanced stages. This is huge considering the current operating capacity is 33 GW. The company is also investing significantly in developing additional sustainable solutions through its investment funds. The company and its partners invest in carbon capture and storage, renewable natural gas, materials recycling, solar panel manufacturing, and green ammonia projects. Brookfield estimates that development projects financed with retained cash flow will result in an additional 3% to 5% increase in FFO per share each year.

In addition to organic growth, Brookfield expects to make aggressive acquisitions to further increase its FFO growth rate. The company believes M&A activity could increase FFO per share by more than 9% annually. The company plans to fund the deal by recycling capital (selling mature assets to fund new investments with high returns). The company agreed to invest $2 billion in multiple deals last year, which should increase cash flow this year. Brookfield expects to spend $7 billion to $8 billion on aggressive acquisitions over the next five years.

Brookfield’s four growth drivers should be the driving force behind increasing FFO per share by more than 10% annually through 2028. This supports the company’s plan to increase its dividend by 5% to 9% annually over the long term. Add in its already high yield, and Brookfield’s growth engine should easily help it achieve its goal of generating a total return of 12% to 15% annually.

Strong return potential

Brookfield Renewable has created significant wealth for investors since its founding more than a decade ago. Given its high dividend yield and high growth potential, you could potentially earn even more in the future. That makes it one of the best energy stocks to buy today.