Green investments are a must-have for any long-term portfolio. Traditional utilities that are still stuck with fossil-fuel burning facilities face massive costs associated with replacing those older facilities with newer, clean ones. Fortunately, there is an emerging number of investments on the market that offer a renewable energy portfolio that is both growing and secure.
A traditional utility with a renewable portfolio
Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) may appear as just another utility, but in reality, Algonquin is far from that. Algonquin consists of two subsidiaries, Liberty Power and Liberty Utilities. Both segments cater to a growing number of customers in the U.S. market.
Liberty Power is Algonquin’s power generation arm which boasts a portfolio of 36 clean energy facilities. Those facilities have an output of 1.5 GW of power and are well diversified. Specifically, those facilities span across hydro, wind, solar and thermal elements.
In terms of growth, additional facilities under development are set to add 1.5 MW of generating capacity over the next few years.
Liberty Utility provides water, electric and gas utility service to over 750,000 customers across a dozen U.S. states.
Why invest in Algonquin? There are three key reasons prospective investors should consider. First, Algonquin, as a utility, benefits from the stable and recurring income that utilities are known for, which makes Algonquin appealing for investors looking for a defensive stock.
Second, there’s the renewable energy factor. Algonquin’s all-renewable portfolio has a unique advantage over traditional utilities that are still trying to get off fossil fuel, which effectively allows Algonquin to expand its footprint while others focus on adopting renewable energy sources.
Finally, there’s the dividend. Algonquin offers a quarterly dividend that currently works out to handsome 4.62%. Adding to that appeal is the fact that Algonquin has provided annual upticks to that dividend consistently over the past few years.
Renewable energy can make you rich
TransAlta Renewables (TSX:RNW) is a name well known to income-seeking investors. The recent market crash has only increased TransAlta’s appeal. TransAlta’s dividend remains one of the most attractive elements to investors.
Specifically, that dividend currently yields an impressive 8.58% yield, handily making TransAlta one of the best options across the myriad of green investments on the market.
Why should you invest in TransAlta? Apart from its well-diversified portfolio of 30 renewable energy facilities, TransAlta continues to seek out new growth opportunities. By example, two new wind farms came online earlier this year that will begin contributing to that tasty dividend.
The recent market crash has pushed TransAlta’s share price down over 30% in the past month. In other words, this is a phenomenal opportunity to buy a defensive green investment at a discounted rate.
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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 Demetris Afxentiou owns shares of Algonquin Power & Utilities.