Back in May, I’d discussed how oil and gas giants were making significant investments in renewable energy. In the near term, oil and gas stocks have performed well relative to renewables, especially during a rally for spot prices of both oil and gas. Looking long, renewable stocks should remain a top target. These stocks are particularly attractive for TFSA investors, as they present the opportunity for significant capital growth in the long-term while also boasting big income.
A report from Bloomberg New Energy Finance recently forecast that by 2030 renewable energy sources will account for over 60% of the 5,579 gigawatts of new generation capacity. It would also account for 65% of the $7.7 trillion in power investment. Coal and natural gas, by contrast, will see their total share of power generation fall below 50% by 2030 compared to the current 64%.
Let’s look at three stocks today that should benefit from these trends going forward.
Brookfield Renewable Partners (TSX:BEP.UN)(NYSE:BEP)
Brookfield Renewable stock has dropped 10.4% in 2018 so far. Shares have been battered by insider selling and a soft second-quarter report. Brookfield released its Q2 2018 earnings on August 3.
Brookfield continued to report a steady increase in total gigawatt hour generation in the second quarter. Normalized funds from operations (FFO) climbed to $206 million over $170 million in the prior year. On a per-unit basis, this increased to $0.66 from $0.57. Unfortunately, the company reported a net loss of $2 million in the quarter compared to net income of $38 million in Q2 2017.
The company declared a quarterly dividend of $0.49 per share, representing an attractive yield of 6.4%.
TransAlta Renewables (TSX:RNW)
TransAlta Renewables stock has also had a weak year in 2018. Shares are down 13.3% so far. The company released its second-quarter results on August 2.
Renewable energy production was down marginally year over year in the second quarter. This was also a drag on revenue, which dropped to $107 million compared to $110 million in Q2 2017. Comparable EBITDA was flat from the prior year, while adjusted funds from operations climbed to $73 million over $64 million. The company reported that higher contract prices at Canadian Wind managed to offset poor market conditions. Net earnings increased to $65 million over $22 million in the previous year; this was related to a foreign exchange gain and the repurchase of the Solomon Power Station.
The company also declared a monthly dividend of $0.07833 per share, representing an 8.1% dividend yield.
Innergex Renewable Energy (TSX:INE)
Innergex Renewable Energy stock has plunged 8.6% in 2018 so far. Back in July, I’d recommended scooping up Innergex for its rock-solid dividend and overall trajectory in the renewable sector. Innergex released its second-quarter results on August 13.
Total revenues climbed 37% year over year to $149.5 million and adjusted EBITDA increased 15% to $99.1 million. Results were boosted by recent acquisitions and by solid performance in the wind sector in Quebec. The company also declared a quarterly dividend of $0.17 per share, which represents a 5.1% dividend yield.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. Brookfield Renewable Partners is a recommendation of Dividend Investor Canada.