Black Gold vs. Renewable Energy: How to Profit From Both

Prior to the election of Donald Trump, green energy development and adoption was taking off right across the market. Companies were boasting that new facilities would be carbon neutral or completely green, and investments in renewable energy companies were finally making those options both affordable and available to the masses.

Despite the fact that the new administration in Washington is more pro-fossil fuel at the moment, the progress made in renewable energy cannot be denied or undone. Some truly lucrative opportunities have emerged in the renewable energy sector, and more are sure to materialize.

So, as an investor, should your focus be on renewable energy or oil? Let’s take a look at the case for both.

The case for renewable energy

There’s no denying that energy generation and distribution is on the precipice of what is going to be an energy revolution. Oil prices have remained in line with projections over the past few years, despite failed efforts by the OPEC cartel to manipulate production levels and push prices higher through limited supply.

One renewable energy company that continues to impress me is TransAlta Renewables Inc. (TSX:RNW). TransAlta has an impressive portfolio of facilities that spans five provinces, two U.S. states, and Australia. In terms of a renewable energy mix, TransAlta has 18 wind, 13 hydro, and eight gas facilities that, together, produce 2,441 MW of energy.

Over the past year, TransAlta has made several acquisitions, and the company is likely to continue down that path to expand its footprint across North America. Perhaps the most appealing aspect of TransAlta, however, is the dividend. Income-seeking investors will particularly like TransAlta’s monthly dividend that provides a very impressive 6.91% yield.

The case for oil

You can’t mention oil without mentioning the oil sands, and no mention of the oil sands would be complete without Suncor Energy Inc. (TSX:SU)(NYSE:SU). There are other oil companies operating in the oil sands, but Suncor presents a unique opportunity for investors, owing to both Suncor’s size and renowned efficiency.

Suncor is by far the most efficient oil producer on the market. Suncor can not only cover the current dividend and operational costs without issue, but the company can do so even while oil remains at US$37 per barrel. By way of comparison, a barrel of crude currently trades at a little over US$47.

Suncor also has the Fort Hills and Hebron projects coming online later this year. Fort Hills is expected to produce 194,000 barrels per day once at full capacity. The Hebron project, which is also set to become operational before the end of the year, is expected to provide Suncor with over 31,000 barrels per day.

Investors considering Suncor will also take solace in Suncor’s quarterly dividend, which pays an impressive 3.04% yield.

How about both?

Both Suncor and TransAlta are great investment options for very different reasons. Suncor’s efficiency among companies operating in the oil sands is second to none, and that efficiency, when coupled with a myriad of new projects coming online, will continue to provide an avenue of growth for years to come.

TransAlta represents a great investment opportunity for those investors looking primarily at that impressive monthly distribution but that also have a desire to complement their energy sector holdings with a renewable energy stock.

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Fool contributor Demetris Afxentiou has no position in any stocks mentioned.

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