This High-Yield Dividend Stock's Smart Strategy Pays Big Dividends

Core Viewpoint - Brookfield Renewable is leveraging a capital recycling strategy to enhance growth and dividend payouts, exemplified by the acquisition of Neoen following the divestment of Saeta Yield [1][3][10]. Group 1: Capital Recycling Strategy - The capital recycling strategy allows Brookfield Renewable to reduce reliance on volatile capital markets for funding deals, thereby enhancing per-share increases [1][4]. - The company has successfully executed this strategy in the past, such as acquiring Saeta Yield through TerraForm Power, which was purchased for approximately $1.2 billion [6]. - Brookfield plans to sell its thermal plants, which will generate cash for reinvestment into new opportunities [12]. Group 2: Growth and Earnings Projections - The acquisition of Neoen, valued at $6.5 billion, is expected to significantly enhance Brookfield's earnings and dividend growth potential [8][20]. - The company anticipates a 4% to 7% increase in funds from operations (FFO) per share through 2028, driven by inflation escalations and margin enhancements [9]. - Brookfield expects to achieve annual FFO per share increases of over 10% through mergers and acquisitions, while primarily relying on capital recycling [15]. Group 3: Dividend Performance - Brookfield Renewable has a strong track record of dividend payments, having increased its payout by at least 5% annually for 13 consecutive years, with a current yield around 5% [16]. - The company believes that its growth strategies will enable it to meet its annual dividend growth target range of 5% to 9% [21]. Group 4: Project Pipeline and Development - Brookfield has a substantial pipeline of advanced development projects totaling about 20 GW across various regions, which will complement its existing 157 GW of projects globally [20]. - Internally funded development projects are expected to contribute an additional 3% to 5% to the company's bottom line each year [21].