In This Article:
Brookfield Renewable Partners (NYSE: BEP) has done a remarkable job creating value for its investors over the years. The renewable-energy company has been able to consistently increase its cash flow to support 6% compound annual growth in its distribution to investors since 2012, which has helped boost the yield up to 6%. That steady dividend growth has helped power market-beating total annualized returns of 15% since its formation.
Brookfield Renewable believes it can continue creating value for its investors in the future no matter the market conditions. That was one of the key themes on the company's first-quarter conference call, where CEO Sachin Shah laid out how Brookfield can win in both good times and bad.
Image source: Getty Images.
We'll continue being creative during the bull market run
After running through the company's first-quarter results, Shah pivoted and began discussing its outlook. He started by looking at how the company would run its business if the currently strong market conditions continue. He stated:
Looking ahead, we believe the business is well positioned to deliver strong results during all points of the economic cycle. Should the current protracted bull market continue into the foreseeable future, we will continue to execute on the same strategy that we have pursued over the last number of years: looking for pockets of capital scarcity and unique multifaceted transactions in order to partner with other counterparties. In addition, we will continue to finance the business on an investment grade basis and leverage our operating expertise to enhance value through operational organic growth levers.
Brookfield Renewable likes to invest on a value basis, which is harder to do during bull market conditions. It has forced the company to get creative in finding deals that meet its high return standards. One way it has done that is by completing several complex transactions in recent years.
For example, it partnered with its parent, Brookfield Asset Management (NYSE: BAM), to take control of TerraForm Power (NASDAQ: TERP) after the wind and solar power company's former parent went bankrupt. The two companies subsequently invested more money in TerraForm to help it buy a wind and solar company in Spain.
Brookfield Renewable's most recent deal was a creative transaction with Canadian utility TransAlta (NYSE: TAC). Brookfield is investing $750 million Canadian ($557 million) directly into the company via preferred stock that will eventually convert into an ownership interest in TransAlta's hydroelectric portfolio.