If financial independence is your goal, then where you invest your money matters. You want assets that not only grow in value over time but also provide reliable passive income — ideally from sectors that are poised for long-term relevance. In 2025, few industries are as promising in that regard as renewable energy.
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With a $20,000 investment budget, I’d choose two of the most compelling Canadian energy stocks on the TSX: Brookfield Renewable Partners (TSX:BEP.UN) and Hydro One (TSX:H). These two stocks offer a powerful combination of growth, income, and resilience — perfect for building a passive income stream while staying on the path to financial freedom.
Why Renewable Energy is a Smart Bet in 2025
Renewable energy isn’t just a “green” trend — it’s a fundamental global shift. Governments around the world are prioritizing cleaner power, while businesses and consumers are demanding more sustainable solutions. This is driving billions in investments toward renewable infrastructure, and companies at the center of that shift are benefiting both operationally and financially.
Canada, with its vast hydroelectric resources and growing solar/wind infrastructure, is uniquely positioned. That’s why smart investors are turning to Canadian renewable energy stocks not just for growth — but for defensive income, even during market volatility.
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1. Brookfield Renewable Partners (TSX:BEP.UN): A Global Clean Energy Powerhouse
Brookfield Renewable is one of the largest pure-play renewable energy platforms in the world. Its diversified portfolio includes hydroelectric, wind, solar, and energy storage assets across North and South America, Europe, and Asia. This global footprint reduces geographical risk and allows for stable, diversified revenue streams.
Key Reasons to Invest in Brookfield Renewable:
- Strong Financials: In Q1 2025, Brookfield reported $315 million in funds from operations (FFO), or $0.48 per unit — up 7% from a year earlier.
- Aggressive Growth: The company is actively expanding through acquisitions like Neoen and National Grid Renewables.
- Capital Strength: With over $4.5 billion in available liquidity, Brookfield is well-positioned to pursue high-return renewable projects.
- Attractive Dividend: Currently offering a 6.7% forward yield, Brookfield provides strong income plus capital appreciation potential.
For long-term investors, Brookfield offers the perfect mix of growth and yield — and it’s already profitable and proven.
2. Hydro One (TSX:H): A Defensive Dividend Play with Steady Growth
While Brookfield gives you international exposure and upside potential, Hydro One offers something equally important: predictability. As Ontario’s largest electricity transmission and distribution utility, Hydro One services over 1.5 million customers — making it an essential part of Canada’s energy infrastructure.
Why Hydro One Deserves a Spot in Your Portfolio:
- Recession-Resistant: Electricity is a necessity, which makes Hydro One’s business model highly defensive during economic downturns.
- Stable Revenue & Earnings: In 2024, the company earned $8.5 billion in revenue and $1.16 billion in net income.
- Reliable Income: The stock pays a quarterly dividend of $0.3142/share (2.4% annual yield) — modest but incredibly consistent.
- Ongoing Investment: With over $3 billion in infrastructure improvements in 2024, Hydro One continues to modernize its grid for the future.
Hydro One is not a high-growth rocket ship, but it’s a rock-solid income anchor — ideal for balancing more aggressive holdings like Brookfield.
How I’d Invest the $20,000: A Balanced 50/50 Split
To maximize both income and risk-adjusted returns, I’d divide the $20,000 equally:
- $10,000 into Brookfield Renewable Partners: For global growth exposure, a 6.7% yield, and rising cash flows.
- $10,000 into Hydro One: For domestic stability, consistent earnings, and a defensive yield.
Here’s a breakdown of the passive income you could expect from that investment in Year One:
| Stock | Investment | Dividend Yield | Estimated Annual Income |
|---|---|---|---|
| Brookfield Renewable | $10,000 | 6.7% | $670 |
| Hydro One | $10,000 | 2.4% | $237.64 |
| Total Passive Income | $20,000 | — | $907.64 |
And since both companies have a track record of growing dividends, that annual payout could grow significantly over time, especially if you reinvest the dividends or hold the stocks in a tax-sheltered account like a TFSA or RRSP.
Final Thoughts: Build Financial Independence, One Dividend at a Time
The road to financial independence is built on consistent investing in high-quality, income-producing assets. By combining the yield and growth of Brookfield with the stability and reliability of Hydro One, this $20,000 portfolio positions you for both steady passive income and capital appreciation over time.
This strategy is simple, effective, and forward-thinking — a perfect formula for building wealth through renewable energy investing in Canada.
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