Why Brookfield Renewable Shares Jumped Friday

What happened

Brookfield Renewable (NYSE:BEP) (NYSE:BEPC) reported first-quarter earnings today, and the stock popped in response. Shares of the owner of renewable energy generation assets were 6.5% higher as of 1:25 p.m. ET. The move helped contribute to a more than 20% gain in the partnership's shares so far this year.

So what

Investors liked the double-digit growth in funds from operations (FFO), as well as the partnership's investment commitments that should add to future growth. FFO in the quarterly period increased 13% versus last year, and Brookfield Renewable has already committed to $8 billion in new investments for this year, along with its institutional partners. More than $1 billion for those investments will come from Brookfield itself.

Image source: Getty Images.

Now what

Investors in Brookfield Renewable count on management's ability to successfully deploy capital in the clean energy sector. Management works to recycle that capital as it appreciates in value to invest in assets they believe will result in higher returns.

In the first quarter, the company generated over $300 million in proceeds from the sale of existing assets. Those assets returned more than twice the original invested capital. Brookfield already has plans to generate more than $4 billion in asset sales together with its partners. That would result in about $1.5 billion net to Brookfield Renewable.

The majority of Brookfield's first-quarter revenue and FFO came from hydroelectric generation assets in North and South America. The partnership also owns wind, utility-scale solar, and energy distribution assets globally. The company expects those assets, along with future investments, to allow it to increase its distribution to shareholders by 5% to 9% annually.

Investors buying today seem to realize that with a 13% year-over-year increase in FFO in the first quarter, that is likely to be achievable.

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Howard Smith has positions in Brookfield Renewable. The Motley Fool has positions in and recommends Brookfield Renewable. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.