A Trump Loss/Biden Win in the Election Could Boost This TSX Stock

It is evident that U.S. president Donald Trump and former vice-president Joe Biden have dramatically different views on the future of renewable energy.

| More on:

It is evident that U.S. president Donald Trump and former vice-president Joe Biden have dramatically different views on the future of renewable energy.

The winner of the upcoming election could significantly impact companies in this sector. A Biden win in November could benefit stocks such as TransAlta Renewables (TSX:RNW).

Different views on renewable energy

It is no secret that President Trump has downplayed the environmental impact of climate change. He has been, and continues to be, an ardent supporter of the fossil fuel industry.

During Trump’s tenure as president, his administration has

  • repealed the Clean Power Plan, which would have accelerated renewable energy development,
  • imposed tariffs on imported solar cells, and
  • wiped out energy tax credits.

Biden, however, has pledged to continue the growth of renewable energy that occurred during his terms as vice-president to President Barack Obama.

At the start of Obama’s term in 2009, the U.S. had 1.2 gigawatts (GW) of solar capacity. Since then, U.S. installations have grown to approximately 70 GW.

If elected, Biden promises to spend $2 trillion on renewable energy over the next four years. Biden would like to see the U.S. use 100% carbon-free electricity by 2035 — a substantial change from a prior target of 2050.

Biden also plans to create a Unity Task Force to help drive the installation of approximately 500 million solar panels within the next five years. This task force would pursue these green goals while also actively seeking to drive stronger action on climate change.

TansAlta Renewables

TransAlta owns and operates 13 hydro facilities, 19 wind farms, and one natural gas plant in Canada. The company’s portfolio also extends into the U.S. and Australia.

With a market cap of nearly $4.5 billion, TransAlta aims “to create stable cash flows and consistent returns for investors with an investment vehicle comprised of power generation assets that are fully contracted for the long-term with creditworthy counterparties.”

These long-term regulated contracts are known as PPAs (or power-purchase agreements). More than 50% of the company’s facilities are bound to PPAs that extend into the 2030s. These long-term agreements provide stability for the company’s investors.

With the stock trading at $16.88 as of this writing, the current dividend yield is 5.54%. The stock has gained over 60% in the last five years. TransAlta has also increased dividends at an annual rate of 4% since 2013.

In the company’s most recent quarter, TransAlta reported its adjusted EBITDA increased by 3.6% to $115 million and funds from operations rose 12.5% to $90 million. The company generated $71 million from operating activities in the quarter, which resulted in a year-over-year growth of 36%. At the end of the second quarter, TransAlta had $498 million in liquidity.

The bottom line

With most of its facilities secured by long-term contracts, TransAlta’s revenue should continue to be stable. If Joe Biden is elected as the next U.S. president, renewable energy will be at the forefront of his agenda. This should only accelerate TransAlta’s growth over the next decade.

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 Cindy Dye has no position in any of the stocks mentioned.

More on Energy Stocks

ways to boost income
Energy Stocks

Act Fast: These 2 Canadian Energy Stocks Are Must-Buys Before Year-End

Here are two high-potential Canadian energy stocks with stable dividends you can consider adding to your portfolio before the year…

Read more »

canadian energy oil
Energy Stocks

2 No-Brainer Energy Stocks to Buy With $1,000 Right Now

If you have $1,000 to invest right now, CES Energy Solutions (TSX:CEU) and Enerflex (TSX:EFX) are no-brainer options.

Read more »

The letters AI glowing on a circuit board processor.
Energy Stocks

Maximizing Returns: How Canadian Investors Can Profit From AI’s Growing Energy Needs

Renewable energy stocks like Brookfield Renewable Partners (TSX:RNW) profit from AI's extreme energy usage.

Read more »

oil pump jack under night sky
Energy Stocks

3 No-Brainer Oil Stocks to Buy With $1,000 Right Now

The current geopolitical situation may not be conducive to oil price gains, but there are also positive catalysts.

Read more »

oil and natural gas
Energy Stocks

Best Stock to Buy Now: Suncor vs Cenovus?

Comparing Canada's energy giants: While Suncor stock dominated 2024, Cenovus could be a more compelling choice for 2025 with stronger…

Read more »

Oil industry worker works in oilfield
Energy Stocks

The Ultimate Energy Stock to Buy With $1,000 Right Now

A prolific energy stock is a strong buy right now if you want a substantial windfall from an investment of…

Read more »

oil pump jack under night sky
Energy Stocks

Top Energy Sector Stocks to Invest in for 2025

These energy giants deserve to be on your radar.

Read more »

A worker overlooks an oil refinery plant.
Energy Stocks

3 Reasons to Buy Enbridge Stock Like There’s No Tomorrow

There are plenty of reasons to consider buying Enbridge stock.

Read more »