Over the last few years, people have become conscious of rising pollution levels and are shifting to renewable energy sources to meet their energy requirements. Further, Joe Biden’s victory in the U.S. presidential elections has significantly boosted the sector. Amid the increased interest in the renewable energy sector, here are the four TSX stocks you could buy right now for superior returns.
TransAlta Renewables (TSX:RNW) is one of the major players in the renewable energy space, with an economic interest in 44 power-generating facilities. These facilities together can generate around 2.6 gigawatts of power. The company sells its power through long-term agreements, thus protecting its financials from volume and price fluctuations. Currently, the company’s weighted average life of these contracts stands at around 12 years.
Meanwhile, the company has around 2.9 gigawatts of power-producing facilities under evaluation. It also recently signed an agreement to acquire three power-generating assets from TransAlta Corporation, increasing its power generating capacity by 303 megawatts. So, the company’s growth prospects look healthy. Further, the company pays monthly dividends, with its forward yield currently standing at 4.5%.
Northland Power (TSX:NPI) currently owns and operates 2.6 gigawatts of power-generating facilities globally, while 300 megawatts of additional facilities are under construction. In January, the company completed the acquisition of a Colombian regulated utility company EBSA, which could contribute around $100 million to its adjusted EBITDA. The company has also signed an agreement with PKN ORLEN to acquire a 49% stake in its Baltic Power offshore wind project — a 1.2 gigawatt power-generating facility.
Meanwhile, Northland Power is also expanding its footprint to Asia. It has around 2.6 gigawatts of power-producing projects at various development stages in Taiwan, Japan, and South Korea. So, the company offers strong growth prospects. It also pays monthly dividends, with its forward yield currently standing at 2.5%.
Algonquin Power & Utilities
Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) operates under two business units Liberty Utilities and Liberty Power. Liberty Utilities, which compromises 70% of the company business, provides water, electricity, and gas to around one million customers. Liberty Power is involved in the power production from renewable energy sources, which comprises the remaining 30%. Its low-risk utility business provides protections from downside risks, while its power production business offers high-growth prospects.
Meanwhile, the company has planned to make $9.4 billion investments over the next five years, including $3.1 billion in renewable assets and $6.3 billion in regulated utility assets. These investments could increase its rate base and also drive adjusted EPS at a CAGR of 8-10% during the same period. The company pays quarterly dividends of $0.2019 at a dividend yield of 3.7%.
Brookfield Renewable Partners
Brookfield Renewable Partners (TSX:BEP.UN)(NYSE:BEP) is one of the prominent players in the renewable energy space, operating in 15 countries with a production capacity of 18.8 gigawatts. Boosted by its strong fundamentals, the company has delivered an average annualized returns of 18% over the last two decades, easily outperforming the broader equity markets.
Its highly diversified, high-quality assets and long-term PPAs (power-purchase agreements) provide stability to its financials. The average life of these PPAs currently stands at around 15 years. Further, the company has approximately 18 gigawatts of projects under various stages of development. These projects, acquisitions, and margin expansion could drive its funds from operations at an average annualized rate of 10% over the next five years. The company also pays quarterly dividends, with its yield standing at a healthy 3%.
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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 Rajiv Nanjapla has no position in any of the stocks mentioned.