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The depletion of fossil fuel reserves has been quite concerning. Besides, rising pollution levels increased attention to climate change, and the requirement to ensure sustainability has forced the world to shift toward cleaner and greener energy sources. Hydroelectricity, natural gas, solar, geothermal, and ocean energy have recently seen increased adoption.
Canada and the United States were early leaders in this transition, and they now house many renewable energy companies. Some of these companies have the potential to become highly successful in the future, providing investors with good returns.
Top 5 Renewable Energy Stocks To Invest In Right Now
Renewable Energy Stocks To Buy Now
Here are five renewable energy stocks you should look into:
1. Northland Power
Northland Power is hailed as Canada’s first independent renewable energy producer that develops, builds, owns, and operates clean and green power infrastructure assets mainly across Asia, Europe, Latin America, and North America. The company currently owns approximately 3 GW of generating capacity and has projects that could add 14 GW.
Northland has excellent potential. Even as the energy sector took a beating last year, the company held up better than most stocks and avoided the volatility that most small and mid-cap stocks experienced. It has also shown enormous potential this year, when most growth stocks have failed to perform, and has gained more than 20% so far.
Northland has been steadily growing through mergers and acquisitions and is targeting high-growth markets like Spain, Eastern Europe, the Northeast US, and Colombia. These markets have rewarded the company with lucrative contracts and power purchase agreements varying between 12 years to 20 years. Moreover, its facilities in Saskatchewan, like the North Battleford facility, which can generate power by burning natural gas, have complete contracts established until 2036 ensuring further sustainability in its operations. Northland also pays dividends of 2.67%, which, even though it might seem less compared to the industry levels, is still sufficient considering the market’s condition in the present times.
The stock closed on September 15 at $45.03, and the analyst price for the stock is $50.93, a potential upside of over 13%.
2. Algonquin Power
Algonquin Power is a major renewable energy player in Canada, serving over a million customers in the United States and Canada. The company generates clean energy with 1541 wind turbines, 1.2 million solar panels, and 55 hydroelectric generators. It has over 1,600 MW installed capacity, including long-term contracted wind, solar, and hydroelectric generating facilities.
Algonquin stands out amongst all the energy companies because of its fantastic growth rate. In 2020, it had grown its earnings by a whopping 33.79%, and even in 2021, its performance has been much better than most of its peers. This year too, the stock has only lost less than 1% while the broader market has been suffering miserably.
Algonquin’s rock-solid dividend yielding at 5.15% is also an attractive bait for many investors even on this date. The company is among the Canadian dividend aristocrats, and investors of this company have seen constant dividend growth for over a decade. Notably, it is one of those few ones that had managed to raise its dividends during the COVID-19 pandemic situation. A set of solid financials supports it. It has historically maintained a compounded annual growth rate of 10% in its dividend payouts. So, considering its planned investments and consistent cash flows to support its dividend payouts, the stock is perfect for investors looking for sustainable dividend growth.
The stock closed on September 15 at $17.74, and the analyst price for the stock is $21.81, a potential upside of almost 23%.
3. Brookfield Renewable Energy
Brookfield Renewable Energy Partners is Canada’s most prominent renewable energy player. The company, a subsidiary of Brookfield Asset Management, has over 21,000 MW of capacity and over 6,000 facilities in North America, Europe, Asia, and South America, and its most striking characteristic is that it has the potential to reduce 100% of the overall New York City’s annual emissions.
Brookfield has been planning to expand its operations rapidly and has the potential to deliver outsized returns in the coming years. The company intends to invest more than $50 billion-$55 billion in additional capacity over the next few years and is on track to commission another 6,400 MW by the end of 2023. This extra capacity can be highly beneficial to the company as it will help benefit from the ongoing energy shortage worldwide. Moreover, the current inflationary environment leading to an increase in the price levels will also allow it to increase its revenue levels.
Brookfield would also appeal to dividend-loving investors, offering a dividend yield of more than 3%. The company has consistently paid off dividends over the years and has maintained consistency even during Covid. Furthermore, its net profit margins further ensure that the company’s dividend payments will continue.
The stock closed on September 15 at $50.90, and the analyst price for the stock is $55.16, a potential upside of over 8%.
4. NextEra Energy
NextEra Energy is the largest electric utility company in the USA, with 58 GW of generating capacity. The company is leading the decarbonization movement in the USA by investing heavily in renewable energy generating capacities. The company has survived the high inflation market like a pro gaining more than 6% yearly. With its plan to invest $85 billion to $95 billion within 2025, the company’s prospects will shine brighter.
Moreover, NextEra has further planned to continue its growth pace. Through its Real Zero strategy, it will eliminate carbon emissions from its operations by 2045, and for that, it will invest heavily into renewables at its Florida-based utility. There are plans to decarbonize the US economy as well, and the company will capitalize on a $4 trillion commercial opportunity through 2050 to reach that goal. Further, the company intends to grow its 3.6% yielding dividend at a 12% to 15% annual rate through 2025.
The stock closed on September 15 at $86.01, and the analyst price for the stock is $96.49, a potential upside of a little over 12%.
5. First Solar
First Solar manufactures solar panels and provides utility-scale PV power plants. Despite being a leading player in the global solar energy market for about two decades, its stock hasn’t been much of a performer. However, that may change as the company is enjoying many tailwinds. The company’s shares have already jumped more than 88% in the past six months. With the White House’s support for domestic production of solar panels and the recently passed Inflation Reduction Act that will let homeowners receive federal tax credits for installing new solar power systems at their homes, the stock will receive significant momentum.
Moreover, First Solar will make a series of investments to expand its global footprint. For instance, the company plans to invest up to $1.2 billion in the expansion of its US solar panel manufacturing capacity, out of which $1 billion will be invested in a new 3.5-gigawatt (GW) DC manufacturing facility in the US southeast. This investment will help the company grow its manufacturing capacity to over 10 GWDC by 2025, further increasing its potential.
The stock closed on September 15 at $132.02, and analysts say the stock is fairly valued as of now.
The renewable energy industry is rapidly expanding these days and still has enormous potential. The companies mentioned above are some of the most well-known players in this sector, with a track record of success. They are well prepared to withstand even the most severe market storms, making them relatively safer investments. Investors interested in this expanding industry can therefore consider one or more of the renewable energy stocks listed above.
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