Brookfield Renewable Partners, LP (BEP) is an MLP and one of the world’s largest renewable power companies. Its portfolio consists of Hydroelectric, Wind, Solar, and Energy Transition facilities in North America, South America, Europe, and Asia, notes Marty Fridson, editor of Forbes/Fridson Income Securities Investor.
BEP has maintained a well-diversified portfolio of generation assets that operate under long-term contracts with investment-grade counter-parties.
The Bermuda-based partnership was initially recommended in June 2015 as a Buy for all taxable risk portfolios. We subsequently reviewed the partnership in August 2019, reaffirming our recommendation. Although Bermuda-based for tax purposes, BEP’s corporate headquarters are in Toronto, Canada.
The company is approximately 60% owned by Brookfield Asset Management (BAM), a Canadian multinational company and one of the world’s largest alternative investment management companies. BEP reported strong 1Q 2022 financial results.
Adjusted funds from operations for the quarter were $292.0 million or $0.45 per common unit, up 19.2% from the prior year’s first quarter. Results edged ahead of analysts’ estimates. Revenue was in line with expectations. BEP’s quarterly distribution was cut 20% in Q2 2020, during the early phase of the pandemic, but has since resumed slow growth.
We continue to recommend BEP’s common units as a Buy for all risk taxable portfolios. The partnership issues a K-1 to investors for tax purposes. However, unitholders can convert BEP common units into BEP corporate shares — Broookfield Rewnwable Corp. (BEPC) — and receive 1099 dividends as opposed to K-1 distributions.
BEP and BEPC are identical in terms of economic risk. We think investing in the common shares (BEPC) is simpler from a tax and accounting perspective. With this review we are maintaining the fair value price at $39.50.
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