There’s a lot of uncertainty these days regarding tariffs and their impact on the economy. However, one of the few certainties is that electricity demand will continue growing. Demand catalysts, such as data centers, the onshoring of manufacturing, and the electrification of transportation, could meaningfully increase power demand in the future.
While that electricity will come from many sources, renewable energy will be the biggest beneficiary of the demand surge. Because of this, leading renewable energy dividend stocks Brookfield Renewable (NYSE: BEPC)(NYSE: BEP) and Clearway Energy (NYSE: CWEN)(NYSE: CWEN.A) look like no-brainer investments for those with $1,000 to invest right now.
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Brookfield Renewable is a leading global renewable energy and sustainable solutions company. It operates a diversified portfolio of renewable energy assets, including hydro, onshore and offshore wind, utility-scale solar, distributed generation, and energy storage. The company sells the power generated by these assets under long-term, fixed-rate power purchase agreements (PPAs) to utilities and large corporate electricity buyers. Those PPAs provide it with very stable and growing cash flow (70% link rates to inflation).
Brookfield uses much of that steady cash flow to pay dividends. Its payout currently yields 5.4%. At that rate, a $1,000 investment would generate about $54 in annual dividend income.
The company expects to grow its already high-yielding payout by 5% to 9% per year. It has increased its payment by at least 5% per year since 2001. Given the growth it sees ahead, it should have no trouble continuing to boost its payment.
The company expects its existing portfolio to deliver 4% to 7% annual growth in funds from operations (FFO) per share, driven by inflation escalations and margin enhancement activities. Meanwhile, the company has a vast pipeline of renewable energy projects under construction and in development, which should add another 4% to 6% to its annual growth rate. Add in accretive mergers and acquisitions (M&A), which it expects to fund through its capital recycling initiatives, and Brookfield sees its FFO per share growing at a rate of more than 10% annually for the next decade.
Clearway Energy owns one of the largest clean energy power-generation portfolios in the country. It has solar, wind, energy storage, and natural gas power assets. It also sells the power it produces under long-term, fixed-rate PPAs. Those agreements provide it with steady cash flow, which it uses to pay an attractive dividend (a current yield of 6.1%).