Hillcrest Energy Technologies. (CSE: HEAT)
From concept to commercialization, Hillcrest is investing in the development of energy solutions that will power a more sustainable and electrified future.
Over the past two years, the stocks of some companies carrying high levels of debt have underperformed owing to high interest rates and a challenging macro environment. Among these stocks, a few blue chip stocks with high dividend yields are worth considering, for they are offering investors the opportunity to buy quality stocks at a discount. On the Toronto Stock Exchange, Brookfield Renewable Partners (TSX:BEP.UN) is a good example.
This clean energy stock is currently trading down 48% from its all-time high, with a current market cap of C$21.5 billion, while offering a dividend yield of 6%.
Brookfield has operations in 20 countries around the world and owns and operates a diverse portfolio of renewable energy assets, including solar, wind, and hydro, as well as distributed energy and energy storage. The company aims to generate strong risk-adjusted returns, with a desired internal rate of return of between 12 per cent and 15 per cent.
The growing demand for electricity and the shift to cleaner energy solutions worldwide provides the company with enough room to grow earnings and dividends over time. With an investment-grade balance sheet, Brookfield Renewable Partners has access to diversified sources of capital and the ability to grow its dividend by 5% to 9% per year going forward.
With 70 per cent of the company’s income indexed to inflation and 95 per cent of its debt at a fixed rate, Brookfield Renewable’s per-unit FFO grew at an average of 12 per cent per year from 2016 to 2023, and dividend distributions have grown at an average of 6 per cent per year since 2004. Management also plans to deploy $7 billion to $8 billion for potential growth opportunities, setting the stage for future growth in the share price.
Brookfield Renewable generated $339 million or $0.51 per share in working capital in the first quarter of the year, up 9% year-over-year, according to the earnings report. The company has secured contracts to provide 2,700 gigawatt-hours of incremental power generation per year, with 90 per cent of its development projects under contract with corporate customers.
Earlier this year, the company announced a partnership with Microsoft Corp. to provide the tech giant with 10,500 megawatts of renewable energy generating capacity between 2026 and 2030. It also commissioned about 1,400 megawatts of new clean energy generating capacity in the second quarter and plans to realise 7,000 megawatts of new generating capacity by the end of the year.
Backed by $4.4 billion in available liquidity, the company will focus on its asset recovery programme, with proceeds continuing to be used for other growth opportunities. As a result, despite the stock’s recent weakness, Brookfield Renewable has returned nearly 1,400% to shareholders since its IPO, after adjusting for dividend reinvestment. Bay Street analysts remain bullish on the stock and expect the share price to jump around 30 per cent over the next 12 months.
