The global energy transition to cleaner power sources is a massive market opportunity. Renewable energy leader Brookfield Renewable (NYSE: BEP) (NYSE: BEPC) estimates that it will cost more than $100 trillion over the next 30 years to advance a lower-carbon future. That megatrend should power steady growth for Brookfield for years to come.
Within this megatrend are many smaller yet still sizable opportunities. One emerging high-return investment opportunity for Brookfield is wind repowering, which involves replacing turbine hardware with longer rotors and more efficient equipment. CEO Connor Teskey has noted, “With an estimated 200 gigawatts of global wind capacity reaching 15 years of age within the next five years, the global market for repowerings is large … and is only one segment where we continue to grow our business at attractive returns.”
Meanwhile, nearly 130 governments have established net-zero carbon emission targets. Close to 3,100 businesses have committed to halving their carbon emissions by 2030. This presents a huge opportunity for Brookfield Renewable, which stands out as one of the world’s leading providers of renewable energy.
Brookfield Renewable expects to generate total returns of between 12% and 15% “on a per-unit basis over the long term.”
With demand for renewable energy expanding, and a development pipeline poised to provide significantly more capacity, the company should be in a strong position to achieve that goal, creating value for shareholders along the way.
Ask the Fool
Q: Are most big companies incorporated in Delaware? Why? – D.D., Lakewood, Colorado
A: A lot of them certainly are. According to Delaware’s Secretary of State Jeffrey W. Bullock, Delaware is “the domicile of choice for members of the Fortune 500 at nearly 68%. Approximately 93% of all U.S. initial public offerings are entities registered with Delaware.” Examples include Coca-Cola (which is headquartered in Atlanta) and Walmart (based in Bentonville, Arkansas).
The primary reasons for a company to choose Delaware are tax breaks and a business friendly court system. While Delaware has a corporate tax rate of 8.7%, companies incorporated there that don’t conduct business in Delaware don’t have to pay state income tax; Delaware also doesn’t impose state or local sales taxes.
As for business courts: While those in many states convene juries, the Delaware Court of Chancery employs judges with great business expertise. That makes legal processes there rather efficient. Also, each written opinion supporting a decision sets precedent for future case to make outcomes more predictable than outcomes in a juried system.
Q: What’s a tontine? – H.L., Bridgeport, Kentucky
A: To quote the Merriam-Webster definition, it’s “a joint financial arrangement” in which “participants usually contribute equally to a prize that is awarded entirely to the participant who survives all the others.”
It can take other forms, too: For example, participants might contribute equal sums to a pool and then collect equal payouts from it annually, with payouts increasing in size as the number of living participants shrinks over time.
Tontines were once quite widespread, and there are some annuity products today essentially structured as tontines. Tontines still occasionally appear in movies and TV shows featuring murder plots.
My dumbest investment
Shoulda, Woulda, Coulda
My dumbest investment moves have been failing to buy shares of Apple and Microsoft in the 1980s and 1990s. I knew they had great potential. Shoulda, woulda, coulda … – Trin, online
The Fool responds: You’re not alone – most of us regret moves we didn’t make as well as moves we did. It’s easy to look now at companies such as Apple and Microsoft – which recently had market values near $2.4 trillion (!) and $2.2 trillion, respectively – and slap your forehead in dismay that you didn’t buy shares decades ago.
One way to avoid this kind of mistake , if you’re eager to invest in a company but aren’t ready to fully commit, is to start with a small position: Invest a portion of the amount you’d normally spend on the stock. Then you can keep following the company, and over time, if you grow more confident in it, you can add to your position by buying more.
Keep in mind that seeing great potential isn’t enough on its own to warrant buying a stock. Lots of products and companies have shown tremendous promise, but ultimately failed – remember Betamax video recorders and Toys R Us?
Dig into a company deeply, looking for sustainable competitive advantages, confidence-inspiring leadership and excellent financial numbers: solid and growing profit margins, market share, revenue and earnings. Growth catalysts on the horizon are also promising signs.
Local journalism is essential.
Give directly to The Spokesman-Review's Northwest Passages community forums series -- which helps to offset the costs of several reporter and editor positions at the newspaper -- by using the easy options below. Gifts processed in this system are not tax deductible, but are predominately used to help meet the local financial requirements needed to receive national matching-grant funds.
Subscribe now to get breaking news alerts in your email inbox
Get breaking news delivered to your inbox as it happens.