Investing in Renewable Energy Stocks
Updated: Sept. 13, 2021, 4:11 p.m.The global economy is rapidly working on switching power sources. Due toclimate change concerns, the world is moving away from carbon-based fossilfuels to cleaner alternative energy sources. The decarbonization of the globaleconomy will take an estimated investment of more than $100 trillion over thenext three decades.Renewable energy will play a crucial role in this energy transition. Here’s acloser look at how to invest in the renewable energy industry.Source: Getty Images
5 top renewable energy stocks
Many companies focus on renewable energy, putting them in an excellentposition to benefit from this investment megatrend. However, a few energycompanies stand out above their peers as the best renewable energy stocks tobuy. These top-tier green energy companies include:Data source: Ycharts. Market cap data as of Aug. 22, 2021.Here’s a closer look at these leading renewable energy stocks:
Brookfield Renewable is a global leader in renewable energy. It’s one of theworld’s largest producers of hydroelectric power, which made up more than 62%of its portfolio in 2021. Brookfield also has growing wind (onshore andoffshore), solar (utility-scale and distributed generation such as rooftopsolar), and energy storage expertise. The company sells the bulk of its powerunder long-term PPAs that generate steady cash flow.Brookfield has an excellent track record. Since its inception, the company hasgenerated an annualized total return of 20%. Powering its growth has been thesteady expansion of its portfolio through acquisitions and developmentprojects. Those two factors have increased Brookfield’s earnings at a morethan 10% compound annual rate over the past decade, fueling 6% compound annualgrowth in its dividend payments since 2012.Brookfield sees even more growth ahead — up to 20% annually through 2025 –powered by its extensive pipeline of renewable energy development projects andadditional acquisitions. That should enable the company to hike its dividendby 5% to 9% per year — making it one of the best renewable energy dividendstocks while maintaining its top-notch balance sheet.
The top renewable energy stocks should generate strong returns for
investorsClimate change and socially responsible investing are major catalysts for theclean energy revolution. Those factors will drive trillions of dollars ofinvestment in renewable energy in the decades ahead.While that rising tide should lift all boats, the top renewable energy stocksshould generate some of the best returns for investors. These green energycompanies have already proven to be value creators and have the financialstrength to capture opportunities that should yield outsized total returns inthe coming years.
More on investing in renewable energy
Electric Car StocksA compelling renewable energy industry for long-term investors.ESG StocksAlign your investments with your values with ESG investing, which takes asocially responsible approach to the market.Vegan StocksVeganism has been around for millennia, but it’s only recently that plant-based eating has become big business.Liquefied Natural Gas StocksA cleaner and cheaper energy alternative to fossil fuels.
What is renewable energy?
The green energy sources include: * Wind * Solar * Hydro * Biomass * Geothermal * Ocean waves and currents * Green hydrogen
What is the best solar energy stock to invest in?
The following three solar energy stocks, are worthy of consideration: 1. First Solar: Manufactures thin-film solar panels 2. Brookfield Renewable: Operates solar-energy-generating facilities, wind farms, and hydroelectric power plants 3. SolarEdge Technologies: Manufactures power optimizers for solar panels
Is renewable energy a good investment?
The clean energy sector represents a massive opportunity for investors.However, investors must pick stocks carefully, since not all will capture thefull extent of this opportunity. Two key characteristics to look for are astrong balance sheet and a solar energy-focused growth profile, since thosefactors could give a company the power to generate higher returns.
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Big Tech climate targets
Google vice-president Majd Bakar © Josh Edelson/AFP/GettyALPHABET Google to operate on completely carbon-free energy, 24 hours a day,by 2030.Google has offset all historical emissions since its founding in 1998.AMAZON Operations to be powered by renewable energy by 2025. Net-zeroemissions by 2040.$2bn fund to invest in start-ups that help companies cut emissions.FACEBOOK Achieved net-zero emissions for operations last year.Net-zero emissions across supply chain by 2030.MICROSOFT Carbon negative by 2030, actively removing more carbon dioxide fromthe atmosphere than it produces, including supply emissions.$1bn fund to invest in new climate technologies.APPLE Emissions to be cut 75 per cent by 2030 across entire supply chain,carbon removal technologies used to compensate for the remaining emissions.Apple operations now completely powered by renewable energy.Additional reporting by Richard WatersThis article is part of an FT series about the global boom in renewable energy