It’s been a rough few weeks, to put it lightly. Retirement investors have no doubt been watching the markets for signs of a recovery. In the last month, the TSX Composite Index has managed to rally 12.7% — a significant improvement.
That said, there are indications that the economic pain is likely to last longer. Economic leaders are signalling the onset of recession, with the potential for a full-blown depression.
Retirement investors therefore need to know that their stock portfolios will be able to go the distance, which means their holdings should be as airtight as possible. But many of the names which Canadians rely on for reassurance have been severely underperforming the market. The Big Five banks, for example, once stalwarts of a sturdy economy, have been showing their cyclical side.
Retirement investors should add green energy growth to RRSPs
Energy stocks have also proven unreliably volatile during the market crash. Oil stocks are fast becoming a hazard in a portfolio. Many investors who rely on a fund manager might not even know just how exposed they are to this tanking asset class.
Of course, value opportunities abound in some of the biggest blue-chip names. But retirement investors may want to start looking elsewhere for safe returns.
One stock that may fit the bill right now is Brookfield Renewable Partners LP (TSX:BEP.UN)(NYSE:BEP). Energy stocks are a divisive topic right now. However, one thing that retirement investors can rely on is growth in renewables.
The green energy sector is becoming cost efficient as it scales up production. And as oil prices continue to falter, green power is looking like a more secure long-term investment.
Brookfield Renewable Partners is an ideal stock for a Registered Retirement Savings Plan (RRSP) for two solid reasons. First of all, the Brookfield name brings assurance of world-class asset management expertise.
Second, this stock is strongly diversified. With just one name, investors gain access to growth markets in hydroelectric, wind, and solar power generation.
Now let’s look at performance. For the mid-range retirement investor, it should be noted that Brookfield Renewable Partners is looking at total returns of 113% by 2025. While that’s a fairly conservative projection, it gives some idea of just how much growth there is in this sector.
It’s fairly good value, with a P/B of 1.7 times book that aligns point-for-point with the Canadian renewables sector average.
Retirement investors seeking a super long-range buy should note that Brookfield Renewable Partners has a low 36-month beta of 0.73, which makes for a low-volatility play that would suit inclusion in a Tax-Free Savings Account (TFSA). Despite the extreme fluctuation in the market, Brookfield Renewable Partners has gained 13% in the last month.
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The bottom line
Diversification is key to surviving the coronavirus market crash. But retirement investors also need to mix growth in with their dividend stocks.
Brookfield Renewable Partners is a strong buy for any investors looking to tap growth in the global green energy megatrend. Green power is a strong play as the thesis for investing in hydrocarbon fuels weakens.
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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 Victoria Hetherington has no position in any of the stocks mentioned.