My conservative Top Pick for 2023 is Brookfield Renewable Energy Corporation (BEPC) — one of the best publicly traded renewable energy portfolios you can buy, suggests Tim Melvin, editor of The 20% Letter.
While it is no secret that I think fossil fuels will be part of the energy picture for much longer than the pundits and politicians are telling you, I am not unaware that renewables will be the fastest-growing segment of the market.
The parent company, Brookfield Asset Management (BAM), has been in the energy business for a long time and is determined to be a leader in all aspects of the industry, including renewable. Originally, the Brookfield portfolio was primarily hydro plants. As the company began to focus on adding solar and wind projects, hydro declined to about 50% of the portfolio.
Brookfield has made it clear it intends to be involved in all aspects of the renewable energy business. So far, in 2022, the company has invested $12.8 billion in carbon capture, distributed generation, nuclear, battery storage, and transition investments.
Brookfield also just signed an agreement to buy Scout Energy for $1 billion. This allows it to add more than 800 megawatts of operating wind assets and a pipeline of more than 22,000 megawatts of wind, solar, and storage projects across 24 states, including almost 2,500 megawatts of under-construction and advanced-stage projects to the asset portfolio.
In October, Brookfield combined with uranium producer Cameco (CCJ) in a strategic partnership with Cameco to acquire Westinghouse Electric, one of the world’s largest nuclear services businesses. Brookfield management believes, as I do, that nuclear is critical to reaching net-zero carbon emissions.
While fearmongering keeps the greenies from embracing nuclear so far, history shows it to be one of the safest, greatest energy sources in existence. Brookfield currently produces 24 gigawatts (each gigawatt is enough to power about 750,000 homes) and has a development pipeline of more than 100 gigawatts.
Brookfield is targeting 12% to 15% annualized returns and is committed to a high level of dividend growth. Right now, the shares are yielding just over 4%. The best way to invest in Brookfield is to buy a little now, then reinvest the dividend and add to your position on every big down day. This is an asset collection you can own for decades.
