One Energy Stock I'd Buy Right Now and Never Sell

The world consumes a lot of energy each day to keep the global economy humming. It will need even more in the future to power the AI data centers that could supercharge economic growth. Forecasters expect global electricity demand to grow at a 3.5% annual rate through 2050 (an acceleration from the 2.5% annual growth rate since 2010), driven by surging electricity demand from data centers (8% to 10%+ annual growth).

I believe that Brookfield Renewable (BEPC +2.18%)(BEP +1.51%) is one of the best-positioned energy stocks to capitalize on the global power surge. That’s why I’d buy it right now and never look back.

Image source: Getty Images.

The global leader in clean power

Brookfield Renewable operates one of the largest zero-carbon energy platforms in the world. It’s a global leader in hydroelectric power generation and operates large-scale wind, solar, and energy storage facilities. Brookfield also invests in several sustainable solutions, including leading nuclear energy service company Westinghouse.

The renewable energy company sells most of the electricity it produces under long-term, fixed-rate power purchase agreements (PPAs) with utilities and large corporations. The bulk of those PPAs link power rates to inflation (70% of its revenues). As a result, Brookfield generates very stable and steadily rising earnings.

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NYSE: BEPC

Brookfield Renewable

Today’s Change

(2.18%) $0.88

Current Price

$41.29

Key Data Points

Market Cap

$7.4B

Day’s Range

$40.07 - $41.46

52wk Range

$23.73 - $45.18

Volume

34K

Avg Vol

1.2M

Gross Margin

26.62%

Dividend Yield

3.66%

Multiple growth catalysts

Rising power prices provide Brookfield with a strong growth foundation. Inflation-linked rate increases should grow its cash flow per share at a 2%-3% annual rate. Additionally, Brookfield expects margin-enhancement activities, such as securing higher-rate PPAs when existing ones expire, will add another 2% to 4% to its bottom line each year. For example, the company recently signed a $3 billion deal to supply Google with hydropower as part of the largest-ever hydropower framework agreement.

Brookfield is also investing heavily in developing new clean power capacity (about $850 million per year). For example, it signed a 10.5 gigawatt deal to develop renewable energy to support Microsoft’s surging power needs over the next several years, the largest ever corporate renewable energy PPA. Brookfield estimates that its development pipeline will add another 4% to 6% to its cash flow per share each year.

Additionally, Brookfield expects to continue acquiring companies to expand its platform and capabilities. For example, it’s investing in the privatization of Boralex, a leader in the Canadian and French renewable energy markets. Accretive M&A transactions, like its investment in Boralex, further accelerate the company’s growth rate.

Brookfield expects its multiple growth drivers will power more than 10% annual growth in its cash flow per share through at least 2031. That supports its plans to increase its high-yielding dividend (currently 3.9%) by 5% to 9% per year. With power demand expected to grow rapidly for decades, Brookfield should continue to grow its cash flow and dividends at strong rates.

Powerful total return potential

Brookfield Renewable has the power to deliver total returns in the low-to-mid teens over the next five years. It could continue to generate robust returns for decades to come. That’s why it’s the one energy stock I’d buy right now and hold for the rest of my life.