The world is undergoing a transition from dirty to sustainable sources of energy. There are many reasons to believe the government will do what it can to aid this transition, and today, investors have the opportunity not just to help drive a sustainable future, but to get paid huge dividends or distributions while they wait for their shares to appreciate over the long term.
Here are five renewable stocks that both income and growth investors should consider picking up today.
TransAlta Renewables Inc. (TSX:RNW)
TransAlta Renewables has a strong portfolio of North American renewable energy assets, including 18 wind plants, 13 hydro plants, and one gas-fired plant. The company also has assets in Australia with seven gas-fired plants and a partial stake in a 270 km gas pipeline.
The company has made several acquisitions over the last year, which have been huge drivers for dividend growth. The balance sheet remains healthy, and, going forward, it’s expected that TransAlta will continue to expand its renewable footprint across North America and Australia through more strategic accretive acquisitions.
Shares of RNW are currently down ~12% from all-time highs and offer a 6.64% yield.
Brookfield Renewable Partners LP (TSX:BEP.UN)(NYSE:BEP)
Brookfield Renewable owns renewable energy assets across Canada, the U.S., Ireland, Brazil, and Portugal. The impressive portfolio consists of ~220 hydroelectric plants and ~40 wind plants.
The company has 3,000 megawatts in projects which it’ll be busy working on over the next several months. That is expected to drive more distribution hikes going forward.
Shares of BEP.UN are near all-time highs and currently offer a 5.37% yield.
Algonquin Power & Utilities Corp. (TSX:AQN)(NYSE:AQN)
Algonquin is a North American operator with over 1,300 megawatts of capacity consisting mainly of wind power plants. The company also has thermal, hydro, solar plants, and an impressive portfolio of water utilities.
Like many other renewables, Algonquin has been busy making smart accretive deals over the last few years, and more of the same can be expected going forward.
Shares of AQN are currently down ~6% from all-time highs and offer a 4.43% yield.
Northland Power Inc. (TSX:NPI)
Northland Power has ~1,400 megawatts of operating generating capacity and ~700 megawatts of capacity that’s currently under construction. Most of Northland’s cash flows are generated across regions in Canada and Europe.
Northland’s portfolio is diversified across various sources, including thermal, natural gas, solar, and wind. However, the company’s upcoming projects have a heavy emphasis on wind as the source of energy. The Gemini offshore wind project is expected to generate 600 megawatts of capacity for the Netherlands, and the Nordsee One German wind project is expected to generate 332 megawatts of capacity.
Shares of NPI are currently down ~5% from all-time highs and offer a 4.56% yield.
Boralex Inc. (TSX:BLX)
Boralex has the smallest yield of the renewables mentioned, but don’t be tricked. The dividend is extremely sustainable, and the cash put towards long-term projects is likely to pay off in the form of huge capital gains.
The company currently has 1,400 megawatts of installed capacity — about half of it is generated in Canada.
Going forward, Boralex has the ambitious goal of having 2,000 megawatts of installed capacity by 2020. Several long-term projects are locked in, and that could mean explosive dividend growth in addition to impressive capital gains over the course of the next few years.
Shares of BLX are currently near all-time highs and offer a 2.74% yield.
Bottom line
These are just a few flavours of what you can get out of the renewable energy space. If you’re a long-term investor, you can’t go wrong with any of these companies, which are all pushing for a cleaner future.
What’s the best bet?
Personally, I’d go for NPI as it looks like the best value right now. I’m also a fan of the contracted project pipeline. The current payout ratio may seem high, but I expect a rapid decline over the next year.
