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This TSX Stock Offers a 19% Discount and 4.5% Yield

Image source: Getty Images
Image source: Getty Images

Written by Amy Legate-Wolfe at The Motley Fool Canada

There are many companies offering major discounts right now, but TSX stock Brookfield Renewable Partners (TSX:BEP.UN) has to be one of the best options out there. Today, I’m going to cover why investors should seriously consider picking up this stock down 19% as of writing, with a 4.5% dividend yield.

First, the obvious

Let’s get the obvious, in-your-face reasons out of the way first. Brookfield Renewable stock is a solid choice based on its fundamentals right now. The stock, as I said, is down 19% in the last year alone. But if you think it’s going to keep falling, you’ll be surprised to learn that’s not the case.

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Instead, Brookfield Renewable stock is actually up about 15% year to date. That’s about three months of solid, stable growth by the stock. That’s simply because after a major drop, earnings have proven the TSX stock will continue to climb in the long run. Meanwhile, you’re bringing in a dividend yield that’s far higher than normal. So, let’s get into those long-run reasons next.

Now, the long run

If you’re looking for a strong TSX stock or two to last you for decades, definitely consider Brookfield Renewable stock. There’s an obvious reason, of course. The world is shifting to renewable energy, and this branch of Brookfield invests solely in renewable resources.

Now, there are many renewable energy companies out there. So, why Brookfield Renewable stock? It’s simple: diversification. Rather than invest in one or two types of renewable energy, it invests in it all. You get access to everything from the clean energy of uranium to the renewable energy of wind power, and everything in between. Furthermore, that diversification includes spanning the globe, where the company has assets located in every corner of the world.

This is why it’s such a great choice for long-term investors. You can lock in a great rate today and look forward to growth for years. Growth that’s only bound to expand, perhaps matching the compound annual growth rate (CAGR) of about 9% over the last decade.

It all adds up

To show you why it’s such a great deal now, let’s see how much income you would have had at 52-week lows, what you’ll get now, and what you could get when it returns to 52-week highs.

COMPANY

RECENT PRICE

NUMBER OF SHARES

DIVIDEND

TOTAL PAYOUT

FREQUENCY

TOTAL INVESTMENT

BEP.UN — Lows

$32.58

153

$1.84

$281.52

Quarterly

$5,000

BEP-UN — Now

$41.18

121

$1.84

$222.64

Quarterly

$5,000

BEP.UN– Highs

$53.09

94

$1.84

$172.96

Quarterly

$5,000

As you can see, you’ve already missed out on about $60 of annual income. And if you wait until 52-week highs, you’ll miss out on $50 more! That is why it’s a great time to pick up this TSX stock if you’re hoping for passive income.

However, this stock is a great long-term hold, as I mentioned. So, continue to drip-feed into it, and you’ll be glad you did over the next decade and beyond.

The post This TSX Stock Offers a 19% Discount and 4.5% Yield appeared first on The Motley Fool Canada.

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Fool contributor Amy Legate-Wolfe has positions in Brookfield Renewable Partners. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.

2023