Investment Selection: High-Dividend Shares with Exceptional Yield (Recently Purchased), Suitable for Long-Term Holding Spanning a Decade

Investment Selection: High-Dividend Shares with Exceptional Yield (Recently Purchased), Suitable for Long-Term Holding Spanning a Decade

Mr. Market, often associated with value investor Benjamin Graham, is quite capricious. He occasionally offers enticing deals at reasonable prices, only to swiftly change his mind and inflate the price just as quickly.

I've encountered this situation with my investment in WEC Energy (WEC -1.58%). However, a rapid price increase over a few months led me to sell this utility, reallocating the funds to a higher-yielding investment that remains unfavorable with the markets.

WEC Energy moved too swiftly for me

I purchased WEC Energy in July 2024, when its dividend yield surpassed 4%. The attractive dividend history, potential for dividend growth, and the utility's transformation towards cleaner energy sources were compelling enough to invest.

Yet, shortly after buying WEC Energy, energy stocks surged. The utility's yield now hovers around 3.4%. This yield does not entice me enough to increase my position. Additionally, WEC Energy's stock price saw a near 20% increase in a few months, leaving me concerned about its rapid ascent. At a minimum, I consider WEC Energy fairly priced; no longer a bargain. Even the anticipated 20% stock increase was expected to unfold over a period of 3 years, not 4 months. I opted to secure my profits and shift investments.

A yield significantly greater than the S&P 500 index

I replaced WEC Energy with an exclusive, clean energy-focused business boasting a 5.6% yield. This is 4.5 times higher than the yield provided by the S&P 500. It boasts twice the yield of the average utility, validated by the Utilities Select Sector SPDR ETF (XLU -0.63%) as a benchmark. Furthermore, its yield is 1.6 times that of WEC Energy. This notable increase appeals to me, given the utility space and broader market.

However, my primary reason for purchasing Brookfield Renewable Partners (BEP 1.30%) is its opportunistic investment approach. I believe the world's shift toward cleaner energy alternatives has an extensive growth potential ahead. Brookfield Renewable has operations in various clean energy sectors, such as solar, wind, hydroelectric, storage, and nuclear. It also maintains a globally diversified portfolio, enabling it to invest wherever opportunities arise.

This strategy sets the stage for Brookfield Renewable's distinctive "buy-low, sell-high" approach, facilitated by its partnership with Brookfield Asset Management (BAM 3.18%). By investing in Brookfield Renewable, I effectively collaborate with institutional-scale capital managed by Brookfield Asset Management.

Brookfield Renewable boasts a strong financial position, characterized by an investment-grade-rated balance sheet, and its partnership with Brookfield Asset Management enables it to tackle distressed scenarios. It restores the assets it acquires, both financially and operationally, and then sells the recovered asset to invest in a new opportunity.

Currently, Brookfield Renewable can execute both strategies because well-performing clean energy assets are selling at attractive prices, while financially distressed clean energy assets are available at low costs. Wall Street, however, tends to view the clean energy sector as a whole as troubled, resulting in what I perceive as an attractive price for Brookfield Renewable.

Moreover, the world's ongoing clean energy transition provides a vast growth opportunity ahead. Brookfield Renewable, which consistently increases its distribution, allows me to invest directly in this sustainable energy evolution.

Brookfield Renewable serves as my direct investment

My portfolio includes Enbridge and TotalEnergies as bridge investments, connecting fossil fuel and clean energy. Brookfield Renewable represents my first direct clean energy investment, made after the clean energy sector's fascination waned.

Perhaps I'm being tactically opportunistic too. Presently, anticipation is rife regarding the potential withdrawal of subsidies in the United States. Brookfield Renewable, however, emphasizes that subsidies are not crucial to its long-term prosperity.

I've committed, intending to hold for a decade, or longer. You may also want to consider this out-of-favor, high-yield, utility-like business.

I decided to sell WEC Energy and invest in Brookfield Renewable Partners due to the utility's rapid price increase, which I deemed unsustainable. The new investment offers a yield significantly greater than the S&P 500 index, providing a more attractive opportunity for potential returns.

Brookfield Renewable's opportunistic investment approach, focusing on cleaner energy alternatives with extensive growth potential, appealed to me. The company's diversified portfolio and "buy-low, sell-high" strategy underpinned by its partnership with Brookfield Asset Management made it an appealing choice for my investment portfolio.

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