Looking for a top Canadian utility stock with robust long-term growth potential? Brookfield Renewable Partners (TSX:BEP.UN) might be just what you need, especially if green energy is on your radar. Specializing in renewable energy assets and decarbonization solutions, Brookfield Renewable is strategically positioned to benefit from global sustainability trends.

A global leader in renewable energy

Brookfield Renewable boasts a globally diversified portfolio encompassing hydroelectric, wind, solar, distributed energy, and sustainable solutions. Operating across approximately 30 power markets in 20 countries, the company taps into diverse opportunities and mitigates regional risks. With a portfolio weighted towards developed markets (75% of cash flows from North America and Europe) and low-cost renewable technologies, Brookfield Renewable minimizes risk while maximizing returns.

Currently, the company's operational capacity stands at around 32,500 megawatts (MW), distributed as follows: 26% in hydro, 35% in wind, 22% in utility-scale solar, and 18% in distributed energy and storage. The firm also sees substantial growth potential, with 157,000 MW of development opportunities globally. Beyond traditional renewables, Brookfield Renewable is involved in biofuel production and operates a global nuclear services business.

Strong performance and attractive valuation

Brookfield Renewable has consistently outperformed its sector. Over the past decade, according to YCharts, an investment in TSX:BEP.UN would have grown to approximately $35,360, reflecting annualized total returns of nearly 13.5%, significantly outperforming the Canadian utility sector's return of just over 7% (using iShares S&P/TSX Capped Utilities Index ETF as a proxy).

BEP.UN and XUT 10-Year Total Return Level data by YCharts

After a 39% stock correction from its 2021 peak, the current valuation presents a compelling buying opportunity. The stock offers a generous cash distribution yield of about 5.8%, with a track record of increasing payouts. Brookfield Renewable has raised its cash distribution for 14 consecutive years, achieving a 10-year compound annual growth rate (CAGR) of 5.7%.

Financial strength and future growth

Brookfield Renewable's ability to consistently raise its dividend is supported by steady cash flows from long-term contracts, with an average contract duration of 13 years and approximately 70% of revenues linked to inflation protection. With about 90% of its cash flows contracted, the company is well-positioned to sustain dividend growth and provide stable returns for investors.

The top utility maintains a strong financial position, with an investment-grade balance sheet and an S&P credit rating of BBB+. Notably, 95% of its debt is fixed-rate, with an average maturity of 12 years, ensuring predictable interest expenses.

Looking ahead, Brookfield Renewable is set to benefit from the increasing annual investments needed for the energy transition, electrification, and net-zero objectives. From 2023 to 2028, the company forecasts FFO per unit growth exceeding 10% annually, driven by inflation escalation, margin enhancement, and strategic mergers and acquisitions. Analysts also suggest that shares are currently trading at a discount of about 19% from the recent quotation of $32.98 per unit.

The Foolish investor takeaway

In summary, Brookfield Renewable Partners stands out as a prime candidate for long-term growth, offering a strong combination of income, growth potential, and financial stability.