Amid the global energy transition wave, a notable dividend growth stock has emerged in the Canadian capital market, which is Brookfield Renewable Partners (TSX:BEP.UN). The world’s largest listed renewable energy platform is becoming a core asset in building a tax-free passive income portfolio with a dividend yield of 6.6% and an annualized dividend growth rate of 5% to 9%.
The company owns and operates a diversified portfolio of renewable energy assets, including hydropower, wind, solar and energy storage facilities, with business operations spanning North America, South America, Europe and Asia.
Today, in the era of energy transition, the demand for green electricity is on the rise. Brookfield Renewable, with an installed capacity of over 25,000 megawatts and development projects of over 110,000 megawatts, is one of the largest publicly traded renewable energy platforms in the world.
Over the past 10 years, the dividend payout ratio of this clean energy stock has been increasing, with the goal of achieving an annual growth rate of 5% to 9%. This is a significant advantage for investors who want to increase their income before inflation or over time. The company’s long-term contracts help provide predictable cash flow to support dividend payouts.
Brookfield Renewables stated in its latest first-quarter earnings report for fiscal year 2025 that its Funds From Operations (FFO) was $315 million, or $0.48 per unit, an increase of 15% compared to the same period last year. The company also commissioned 1,300 megawatts of new projects this quarter, and another 8,000 megawatts of projects are under construction.
Once these projects are launched and put into operation, they are expected to generate strong cash flow, thereby enhancing their ability to continue paying and increase dividends.
At the current stock price of $31 per share, if investors purchase 486 shares of Brookfield Renewables and invest a principal of $15,000, they can earn a dividend income of $1,000 per year!
Of course, no stock is without risks, especially when interest rates are rising. Higher interest rates may make the financing cost of its long-term infrastructure projects higher and may lead some yield-focused investors to favor other sources of income such as bonds.
However, the solid financial situation and the global growth outlook help to offset these concerns to some extent. For long-term investors, the recent decline in stock prices may actually be an opportunity to buy more stocks at a higher yield.
