This is One of the Biggest Safe Dividends You Can Get

Brookfield Renewable Partners LP (TSX:BEP.UN)(NYSE:BEP) just increased its cash distribution by 5.1% to an annualized payout of US$2.06 per unit. That implies a yield of 7% at US$29.29 per unit. 

A Sustainable Dividend

In 2018, it increased its funds from operations (“FFO”) per unit by nearly 14%, resulting in a payout ratio of <91% for the year, which was a meaningful improvement from 2017’s payout ratio of 98%. The lower payout ratio makes a safer dividend.

Management aims for cash distribution growth of 5-9% per year in the stock. It’s conservative to assume a cash distribution growth rate of 5% because, since 2011, its distribution has compounded at a growth rate of 5.4%.

Hydroelectric generation

A Global Portfolio

BEP has a large and diversified portfolio of assets. It has a generating capacity of +17,400 MW with 870 facilities across 25 markets in 15 countries. 76% is hydro-electric generation, 20% is wind generation, and 4% is solar generation.

BEP is Well Managed

During 2018, the company has reworked its debt so that it no longer has any material debt that it needs to pay back until 2023. Moreover, in the process, it reduced its average interest rate to 5.4% from 2017’s 5.8%.

BEP maintains an S&P credit rating of “BBB+”, which is two notches better than the minimum investment-grade rating of “BBB-“. It’ll also increase its available liquidity to +US$2.2 billion once it closes the planned/signed asset sales. This will give it more financial flexibility.

Growth

BEP is continuing its expansion in the U.S., as well as, building its operating teams in Europe, India, and China for long-term growth. Currently, Europe, India, and China only contribute 5% to its power generation. So, there’s a lot of growth potential internationally. 

Investor Takeaway

Using rough estimation, an investment in BEP today can deliver an estimated annualized total return of ~12% (from a 7% yield + 5% growth).

Here are more safe dividend stocks to consider on dips.

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Disclosure: At the time of writing, the author owns TSX:BEP.UN.

Disclaimer: I am not a certified financial advisor. This article is for educational purposes, so consult a financial advisor and or tax professional if necessary before making any investment decisions.

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2 thoughts on “This is One of the Biggest Safe Dividends You Can Get

  1. Bonnie

    I have a question about taking the dividends in Cdn or Usd. I’m Cdn, but someone suggested having the dividends journaled to Usd instead of the brokerage converting them to $Cdn dividends.
    Do you have any thoughts?

    Reply
    1. Passive Income Earner Post author

      Hi Bonnie,

      It depends if you think USD will remain strong or not. If you think it will (against CDN In your case), then you can opt to receive the dividends in USD. That’s from a returns perspective. From a usage perspective, if you want to save up some USD for when you travel to the U.S., you can opt to receive dividends in USD.

      However, USD is at a historical high compared to other currencies, including CDN, so I’d rather receive my dividends in CDN instead of the other way around. That said, I have a U.S. investment account, in which I receive U.S. dividends. I just collect the dividends there and reinvest instead of converting back to CDN because my bank charges hefty fees per conversion.

      Hope this helps & Happy V-Day!
      PIE

      Reply

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