Green energy stocks have slowly started to gain investor attention again. Energy stocks steady cash flows can allow for consistent dividend income for passive investors. But in energy, a new era of renewables are developing fast.
For the past decade, you might have heard, and some might have even invested in green energy stocks with hopes of growth. But you only faced disappointment because it took a while for renewable stocks to take flight.
Why Invest in Green Energy Stocks?
But this time, the growth is for real. Governments around the world are investing in infrastructure and demanding more transparent climate-change disclosures. They are making policy-level changes to boost green energy adoption. More countries are signing the pact to go net-zero emission by 2050. According to an International Energy Association (IEA) report, “Renewables are set to account for almost 95% of the increase in global power capacity through 2026.”
The Russia-Ukraine war has given another booster to clean energy development. Europe is looking for alternatives to reduce dependence on Russian oil & gas. Its 10-point plan promotes the expansion of wind, solar, biogas, and nuclear energy.
All this excitement has once again brought green energy stocks into the limelight. There are pure-play green energy stocks, and big utilities switching to renewable energy. Here are five green energy stocks to buy now!
- Brookfield Renewable Partners
- Northland Power
- Algonquin Power & Utilities
- NextEra Energy
- First Solar
Brookfield Renewable Partners
Brookfield Renewable Partners is a pure-play renewable power company, with a mix of hydroelectric, wind, solar and storage facilities. Hydro is its key revenue generator, accounting for 74% of the mix. It earns around 64% cash flow from North America, 19% from South America, 15% from Europe, and 2% from Asia.
Brookfield controls about 5,318 power generation facilities, with a 19,400 MW production capacity. Its diversified asset base will give you exposure to renewable energy while offering a 3.16% dividend yield.
Like Brookfield, Northland Power is a pure-play green energy company with 3.2 GW of generating capacity across North America, Europe, Latin America, and Asia. It has 14 GW of projects under the pipeline. Northland Power has high exposure to wind energy; it is the fourth-largest offshore wind operator globally. It also generates energy from clean-burning natural gas and biomass. The stock also gives you an annual dividend yield of 2.92%.
Algonquin Power & Utilities
While pure-play renewable energy generators are a good investment, utilities transitioning to clean energy have an advantage. They give you current growth from oil and fossil fuels and exposure to future growth from renewables. Algonquin Power & Utilities generates, transmits, and distributes water, gas, and electricity to over 1 million customers in 12 U.S. states. While the company doesn’t give you global exposure, it gives you end-to-end exposure and a diverse power portfolio.
Algonquin has around 3.2 GW of generating capacity, with 64% coming from wind. It has 3,400 MW of green projects in the pipeline. The utility bills from those 12 states have helped the company pay dividends for nine consecutive years and even grow them since 2017. The stock currently has a 4.57% dividend yield.
NextEra Energy is the world’s largest wind and solar energy producer, with $50-$55 billion in new infrastructure spending. The company serves more than 11 million residents of Florida. It also has seven commercial nuclear power units in Florida, New Hampshire and Wisconsin, and hydrogen-energy pilot projects.
NextEra has increased its dividend for more than 25 consecutive years and currently has a 1.9% dividend yield. It expects to grow dividends by 10% through 2024.
The above four companies are in power generation, but First Solar manufactures thin-film solar panels used for utility-scale solar energy projects. The company is benefiting from growing investment in solar projects. At the end of 2021, it had a contracted backlog of 26.2 GW and 53.6 GW of opportunity pipeline.
The company has guided a 14% decline in revenue and a $0-$0.60 EPS in 2022 compared to a $4.38 EPS in 2021. The tepid 2022 guidance comes as the company develops new production facilities for its Series 6 modules. But a strong order backlog could cause the stock to surge once the Series 6 modules production begins in full swing.
The above five stocks can help you tap into the renewable energy movement.
Disclosure: The author holds no position mentioned in this article. Freedom Stocks has a disclosure policy.