Green Energy Is a $1.5 Trillion Opportunity: Get Involved!

From TransAlta Renewables Inc. (TSX:RNW) to Boralex Inc. (TSX:BLX), green energy companies are lining up for a piece of a massive economic opportunity.

Man pointing at a recycling symbol

Image source: Getty Images

When policymakers and the media mention the shift from fossil fuels to renewable energy sources, the discussion is always focused on costs and sacrifices. It’s true that shifting the world to greener energy will need a tremendous investment, but for savvy investors, that’s the perfect opportunity.

According to experts, the combination of consumer demand, regulations, and shifting cost structures is pushing some of the world’s largest energy producers to cleaner sources. This market was already worth $1 trillion in 2018 and could be worth as much as $1.5 trillion by 2025.

Companies that spend the next decade deploying cash and accumulating assets in this sector will reap tremendous rewards when the market matures. Here are some of the leading green energy stocks Canadian investors should consider.

Northland Power

Accumulating $10 billion in renewable power-generating assets is no small feat, but Northland Power (TSX:NPI) has done just that over the past 32 years. The company’s wind, thermal, and solar projects now span from Mexico to Taiwan.

With a market capitalization of $4.5 billion, it’s one of the largest pure-play green energy stocks on the Canadian stock market. It’s also one of the most lucrative dividend stocks — delivering a 4.78% yield at the current market price. My Fool colleague Victoria Hetherington calls it a “safe” dividend alternative to cheap oil stocks.

Boralex

Quebec-based Boralex (TSX:BLX) is another safe green energy dividend stock, albeit with lower yield. The stock currently offers investors a 3.58% dividend income at its current price. However, the company pays out less than 30% of its annual earnings and invests the rest in bolstering the renewable assets and creating long-term value.

I believe Boralex strikes a fine balance between capital appreciation and income, but there are better options on this list.

TransAlta Renewables

Not only has TransAlta Renewables (TSX:RNW) accumulated one of the largest green energy portfolios in the country, but it has done so while maintaining one of the most lucrative and stable dividends on the Canadian stock market.

Over six years, management has maintained the payout ratio at 80-90% of net earnings, and the stock currently delivers a 6.9% dividend yield, making it the perfect addition to an income-seeker’s portfolio.

Brookfield Renewable

My favourite green energy stock, Brookfield Renewable Partners (TSX:BEP.UN)(NYSE:BEP), has delivered a jaw-dropping 34% return since the start of this year. Despite the spike, it’s still one of the most lucrative dividend stocks on this list, offering a 6.4% dividend yield.

The parent company is one of the largest and most experienced asset managers in North America, which puts the green energy firm in a uniquely advantageous position. Brookfield can strike better deals, survive deeper recessions, and deliver magnified economies of scale when compared to independent clean energy players.

Bottom line

Utility companies have been a source of stable passive income for millions of investors for decades. However, the industry is changing, and it seems likely that those who neglect the need for renewable assets will be left behind.

The passive-income source of the future probably lies in a combination of the stocks I’ve mentioned here.

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 Vishesh Raisinghani has no position in any stocks mentioned. Brookfield Renewable Partners is a recommendation of Dividend Investor Canada.

More on Energy Stocks

Arrowings ascending on a chalkboard
Energy Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Canadian Natural Resources stock is well set up to beat the TSX as it continues to generate strong cash flows…

Read more »

energy industry
Energy Stocks

2 TSX Energy Stocks to Buy Hand Over Fist Now

These two rallying TSX energy stocks can continue delivering robust returns to investors in the long term.

Read more »

green energy
Energy Stocks

1 Magnificent TSX Dividend Stock Down 37% to Buy and Hold Forever

This dividend stock has fallen significantly from poor results, but zoom in and there are some major improvements happening.

Read more »

oil tank at night
Energy Stocks

3 Energy Stocks Already Worth Your While

Here's why blue-chip TSX energy stocks such as Enbridge should be part of your equity portfolio in 2024.

Read more »

Solar panels and windmills
Energy Stocks

1 Beaten-Down Stock That Could Be the Best Bet in the TSX

This renewable energy stock could be one of the best buys you make this year, as the company starts to…

Read more »

Dice engraved with the words buy and sell
Energy Stocks

Is Enbridge Stock a Buy, Sell, or Hold?

Here's why Enbridge (TSX:ENB) remains a top dividend stock long-term investors may want to consider, despite current risks.

Read more »

Gas pipelines
Energy Stocks

If You Had Invested $5,000 in Enbridge Stock in 2018, This Is How Much You Would Have Today

Enbridge's high dividend yield hasn't made up for its dismal total returns.

Read more »

Bad apple with good apples
Energy Stocks

Avoid at All Costs: This Stock Is Portfolio Poison

A mid-cap stock commits to return more to shareholders, but some investors remember the suspension of dividends a few years…

Read more »