In this episode of “The 5,” recorded on Oct. 11 , Fool.com contributors Jason Hall and Danny Vena discuss their favorite recession-resistant stocks. Jason Hall nominates Brookfield Renewable ( NYSE:BEPC ) as his favorite stock in a bad economy. Here’s why he likes this renewable energy company so much. Should you invest $1,000 in Brookfield Renewable Corporation Inc. right now?
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Our award-winning analyst team just revealed what they believe are the 10 best stocks for investors to buy right now… and Brookfield Renewable Corporation Inc. wasn’t one of them.
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Jason Hall: I’m going to talk about a company that I actually haven’t talked about very much recently, but I think it very much makes the mark here for me, and that’s Brookfield Renewable. This is just a quick slide that talks about some of the interesting things about Brookfield Renewable and it’s right from their website, ticker BEPC.
Danny Vena: Jason, have you ever talked about this company before? I don’t think I’m familiar with this one.
Hall: Never talked about it a single time. [laughs] Not on this show nor any other. I certainly haven’t written 123 articles about Brookfield Renewable, the leader in renewable energy production in North America. Not once.
Vena: You are nothing if not consistent. [laughs]
Hall: What makes this a compelling business? No. 1, calls itself a global leader in decarbonization. How’s it de-carbonizing? It produces renewable energy from three sources; hydro, electric, so you think about these big hydroelectric dams. The original renewable energy used to be the vast majority of its business. Over the past five or six years, it’s gone on a spending spree acquiring wind and solar assets, as the cost curve has come down, as the incentives have become more aligned and as demand has increased. Here’s how you make money when you do that. You buy or build or invest in these facilities. You sign power consumers like utility companies, large corporate electricity users up to long-term contracts like 20, 25 years, and then you make money. That’s just basically how it works.
You get long-term predictable cash flows. How is this exciting and interesting for investors? You make money on dividend yield and dividend growth, but also just the sheer growth in this sector. At recent prices, and the stock price has gone up pretty significantly. Since the beginning of this year, there was a lot of growth stocks we saw in the same period where its stocks were up at some very high nose-bleed levels. Brookfield Renewable’s stock price has basically come back to earth, and what that’s done is that’s brought the dividend yield back to a far more compelling, about 3%. Now, you take that 3% dividend yield and then you factor in their goal, which is to grow the payouts at a high single-digit rate between 9 and 12% per year, is their goal. You factor that over 10, 20 years and the income that you get will be quite impressive. This is renewable energy, the number of units that are going to be deployed in this over the next 20. years, 30 years is incredible. That’s going to grow a lot of value in terms of the cash flows that this company produces, that’s going to become increasingly valuable to investors to own. Huge fan of this company.
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They just revealed what they believe are the ten best stocks for investors to buy right now… and Brookfield Renewable Corporation Inc. wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
Danny Vena has no position […]
source Here’s the Strongest Renewable Energy Stock You Can Own