Energy stocks: Acquisition to power Brookfield Renewable Partners

Revenue from the purchase of a Colombian utility should help this ‘green’ power generator sustain—or increase—its shareholder payouts.

BROOKFIELD RENEWABLE PARTNERS L.P. (Toronto symbol BEP.UN; www.brookfieldrenewable.com) owns 207 hydroelectric generating stations, 37 wind farms and five natural gas-fired plants. In all, it has over 7,284 megawatts of generating capacity.

Roughly 24% of that power is in Canada, with another 53% in the U.S., 15% in Latin America and 8% in Europe.

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In the three months ended March 31, 2016, Brookfield’s cash flow per share rose 21.4%, to $0.68 U.S from $0.56 a year earlier. Above-normal rainfall pushed up its hydroelectric output.

Energy Stocks: Brookfield to pay $625 million for Isagen stake

The company is part of the consortium this is buying Isagen SA from the Colombian government. Isagen owns six hydroelectric plants and is Colombia’s third-largest power generator. Brookfield will end up with a 25% stake for $625 million U.S.

Investing in Latin America entails above-average political and currency risk. But it lets the company buy high-quality assets at distressed prices.

Brookfield trades at 12.0 times its forecast 2016 cash flow of $2.43 U.S. a share. It yields 6.1%.

Recommendation in Canadian Wealth Advisor: BUY

For our investment perspective on Canadian oil and gas, read The time to invest in Canadian oil stocks is now—or is it?.

For our recent report on a U.S. energy stock that is profiting from pipelines and oil storage, read Buckeye Partners L.P. lifts earnings, shareholder distributions.

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Scott Clayton

Scott is an associate editor at TSI Network. He is the lead reporter and analyst for Dividend Advisor, Power Growth Investor and Canadian Wealth Advisor and a member of the Investment Planning Committee. Scott began his investment and financial career working with Pat McKeough at The Investment Reporter in the 1980s. Subsequently, he worked at the Financial Post Corporation Service for 10 years. He joined TSI Network in 1998. He is a Bachelor of Economics graduate of York University, and he also has an M.B.A. from the Schulich School of Business.

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