Brookfield Renewable: Dividend Rates Announced for Series 1 and Series 2 Preference Shares

In the ever-evolving landscape of renewable energy investments, Brookfield Renewable Partners L.P. has made a significant announcement that could reshape the dividend strategies of income-seeking investors. On April 1, 2025, Brookfield Renewable Power Preferred Equity Inc. (BRP Equity) revealed the fixed and floating dividend rates for its Class A Preference Shares, Series 1 and Series 2, respectively. This move not only provides clarity for current shareholders but also offers a compelling case for new investors looking to diversify their portfolios with stable, high-yielding assets.

Understanding the Dividend Rates

# Series 1 Shares: Fixed Income Stability

The Series 1 Shares will pay a fixed quarterly dividend at an annual rate of 5.203%, translating to $0.3251875 per share per quarter. This fixed rate is particularly attractive for investors seeking a predictable income stream, especially in volatile markets. The stability of this dividend makes it an ideal choice for retirees or those relying on investment income for living expenses.

# Series 2 Shares: Floating Rate Flexibility

On the other hand, the Series 2 Shares offer a floating quarterly dividend rate of 2.62% over the annual yield on three-month Government of Canada treasury bills. For the period from May 1, 2025, to July 31, 2025, the actual quarterly dividend is $0.3317675 per share, payable on July 31, 2025. This floating rate provides a hedge against inflation, making it suitable for investors who are comfortable with some level of income variability and are looking to benefit from potential increases in interest rates.

Comparing to Other Renewable Energy Investments

When compared to other similar investments in the renewable energy sector, Brookfield Renewable's Series 1 Shares offer a competitive fixed dividend rate. Other renewable energy companies may offer preference shares with fixed dividend rates, but the 5.203% rate on Series 1 Shares is relatively high, indicating a strong yield for investors seeking stable income. The floating rate on Series 2 Shares, while lower in percentage terms, provides flexibility and the potential for higher returns if interest rates rise. This makes Series 2 Shares an attractive option for investors who are more risk-tolerant and looking for income that can keep pace with inflation.

Conversion Options and Market Conditions

Shareholders of Brookfield Renewable Power Preferred Equity Inc. have the option to convert their Series 1 or Series 2 Shares, and this decision can be influenced by several factors, including the dividend rates, market conditions, and the specific terms of the conversion.

# Potential Benefits of Conversion

1. Dividend Rate Differences: Shareholders might choose to convert their shares based on which dividend rate they find more favorable. For instance, if the yield on three-month Government of Canada treasury bills is low, the floating rate on Series 2 Shares might be less attractive compared to the fixed rate on Series 1 Shares.

2. Market Conditions: If interest rates are expected to rise, the floating rate on Series 2 Shares might become more attractive, as the dividend would increase with rising interest rates. Conversely, if interest rates are expected to fall, the fixed rate on Series 1 Shares might be more appealing.

# Potential Drawbacks of Conversion

1. Conversion Timing: Shareholders have until April 15, 2025, to exercise their conversion option. Missing this deadline could result in missing out on the benefits of conversion. Automatic conversion rules apply if either series falls below 1,000,000 shares after April 30, 2025, which could limit the flexibility of shareholders who might want to convert their shares at a later date.

2. Dividend Rate Volatility: The floating rate on Series 2 Shares is subject to market fluctuations, which could lead to uncertainty in dividend income. This volatility might be a drawback for investors seeking stable income.

Market Conditions Influence

1. Interest Rate Environment: If interest rates are expected to rise, shareholders might prefer Series 2 Shares due to the potential for higher dividends. Conversely, if interest rates are expected to fall, Series 1 Shares might be more attractive due to their fixed dividend rate.

2. Economic Outlook: In a stable economic environment, the fixed dividend of Series 1 Shares might be more appealing. In contrast, during economic uncertainty, the floating rate of Series 2 Shares could provide a hedge against rising interest rates.

3. Investor Preferences: Risk-averse investors might prefer the stability of Series 1 Shares, while risk-tolerant investors might opt for the potential higher returns of Series 2 Shares.

Conclusion

The decision to convert Series 1 or Series 2 Shares depends on various factors, including dividend rates, market conditions, and investor preferences. Shareholders should carefully consider these factors and the specific terms of the conversion to make an informed decision. Brookfield Renewable's preference shares provide a range of options for investors, catering to different risk tolerances and income needs within the renewable energy sector.



For investors seeking stable income, the fixed dividend rate on Series 1 Shares ensures a consistent income stream, which is beneficial for retirees or those relying on investment income for living expenses. On the other hand, the floating rate on Series 2 Shares offers the potential for higher returns in a rising interest rate environment, making it suitable for investors who are comfortable with some level of income variability. Overall, Brookfield Renewable's preference shares provide a range of options for investors, catering to different risk tolerances and income needs within the renewable energy sector.