The 2 Best Canadian Renewable Energy Stocks to Buy in June 2021

I see significant upside in renewable energy stocks thanks to the growing emphasis on carbon footprint reduction and significant capital investments.

| More on:
Clean energy

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Renewable energy stocks delivered exceptional returns in 2020. However, most of the top TSX renewable energy stocks reversed some of their gains and have witnessed a healthy pullback in the recent past, providing investors a solid opportunity to buy these high-growth stocks at the current levels. 

I see significant upside in renewable energy stocks thanks to the growing emphasis on carbon footprint reduction. Meanwhile, growing adoption, declining costs, capacity expansion, and significant capital investments provide a solid foundation for growth in the future. 

Furthermore, top renewable energy companies are known for paying solid dividends, thanks to their contractual arrangements and ability to generate resilient cash flows. 

Brookfield Renewable Partners 

Brookfield Renewable Partners (TSX:BEP.UN)(NYSE:BEP) is a top pure-play renewable energy stock that should be a part of your portfolio. Its stock has appreciated by over 160% in three years. Further, the company has consistently raised its annual dividends in the last several years, thanks to its high-quality and diversified assets that generate predictable cash flows. 

Amid the heightened volatility in the market, shares of Brookfield Renewable Partners have declined by about 11% this year, providing a good buying opportunity. With its 19,000 megawatts generating capacity and additional 23,000 megawatts of the development pipeline, the company remains well positioned to deliver solid shareholder returns in the coming years. 

Its diversified renewable assets, long-term power-purchase agreements, and inflation indexation support my bullish view. Meanwhile, its growing scale, acquisitions, and expense management are likely to accelerate its growth rate. The company targets 5-9% growth in its dividends in the coming years and offers a decent yield of 3.1%. 

Northland Power

Like Brookfield, Northland Power (TSX:NPI) is another top renewable stock that has generated exceptional returns for its shareholders. Its stock has declined by about 10% this year and looks like attractive long-term bet, thanks to the favourable industry trends, growing asset base, and solid capital-allocation strategy. 

 I expect the momentum in its business to sustain, reflecting growing capacity with increased contribution from the offshore wind. Its net capacity has grown by a CAGR of 10% in the last five years, while adjusted EBITDA increased at a CAGR of 21% during the same period. 

Northland Power’s strong competitive positioning, diversified assets, opportunistic acquisitions, and growing global footprint augur well for future growth. The company’s solid balance sheet, liquidity, and increased growth pipeline could continue to support its growth and drive its stock higher. Further, the company has consistently paid dividends since 1998 and currently yields about 3.0%. Additionally, its average annual total shareholder return stands at 24%, which is the highest among the peers.  

Final thoughts 

Both these companies have a diversified portfolio of renewable energy assets and operational capabilities that position them well to benefit from the strong secular industry trends. Further, long-term revenue contracts, strong balance sheets, strategic acquisitions, and seasoned management indicate that these companies could continue to grow at a brisk pace and boost shareholders’ returns through capital appreciation and dividend growth. 

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 Sneha Nahata has no position in any of the stocks mentioned.

More on Energy Stocks

oil tank at night
Energy Stocks

Oil Finally Crashed: Is the Party Over?

Recently, oil stocks like Cenovus Energy (TSX:CVE) crashed. Is the energy party over?

Read more »

data analyze research
Energy Stocks

TSX Stock Picks With Huge Potential

If you want a TSX stock that's bound for even more strong growth, these three are top picks by analysts.

Read more »

oil and natural gas
Energy Stocks

Can Cenovus Stock Outperform in H2 2022?

Is now the time for investors in Cenovus (TSX:CVE)(NYSE:CVE) stock to buy more, or wait out this volatility right now?

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Energy Stocks

NexGen Energy: The Top Uranium Stock Set to Double in 2022

NexGen (TSX:NXE)(NYSE:NXE) stock is one of the top uranium stocks to consider right now with the potential to double in…

Read more »

energy industry
Energy Stocks

Why Suncor Energy (TSX:SU) Stock Has Declined 20% in June

Will Suncor Energy stock climb back up to $50 again?

Read more »

Dice engraved with the words buy and sell
Dividend Stocks

Is it Time to Sell Oil Stocks?

The energy sector pullback has rattled Canadian investors because of its impact on the broader economy, but it might be…

Read more »

Group of industrial workers in a refinery - oil processing equipment and machinery
Energy Stocks

Oil Stocks in Canada: Are They Still Good Buys?

Oil stocks experienced a rout last week, but the underlying supply-demand imbalance makes them strong buys, nonetheless.

Read more »

Money growing in soil , Business success concept.
Energy Stocks

3 Growth Stocks up +30% in 2022

These three growth stocks are up over 30% in 2022 alone but have come down in the last few weeks…

Read more »