Is it just me, or have there been more frequent extreme weathers globally highlighted in the news in the last year? You know what I’m talking about — the heatwaves in North America (that could be triggering more wildfires), floods in Germany and China, extreme cold, etc. Much of the extreme weather is believed to be made more likely or more severe by human-caused climate change.
What’s the most worrying is that our systems don’t account for these extreme weathers, which has caused inconvenience to some and much worse, such as death, to others.
You can be a part of the movement to reduce the effects of climate change by investing in green companies. You’ll feel good and likely make a good return in the long haul. Consider adding these green dividend stocks to your radar!
Get a +4% yield from this dividend stock
Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) is a good starter stock for anyone looking to invest in renewable utilities. About two-thirds of the company’s assets are regulated utilities diversified across electric, natural gas, water, and wastewater collection. This portfolio should report stable earnings as regulated utilities earn predictable returns. Investors can anticipate organic growth as well as expansion from acquisitions for the dividend stock’s regulated utility portfolio.
The rest of Algonquin’s portfolio are non-regulated renewable and clean power generation facilities that source power from hydro, wind, solar, and thermal energy. This portfolio has long-term contracts (a weighted average term of about 12 years) to keep its returns steady.
Buyers of the dividend stock can expect long-term steady price appreciation from the fairly valued stock. However, you don’t necessarily need price gains to get a return from the stock. AQN stock pays a juicy 4.3% yield.
The dividend stock has been paying an increasing dividend for a decade with a 10-year dividend-growth rate of close to 10%. Its most recent dividend hike was 10%. So, the utility has not lost its mojo yet and is, in fact, a relatively fast-growing utility.
If you’re still undecided about an investment in Algonquin stock, you can wait for its latest updates from its Q2 earnings report that will come out at the end of this week on August 13.
A pure-play renewable utility dividend stock
Unlike Algonquin, Brookfield Renewable Partners (TSX:BEP.UN)(NYSE:BEP) is a pure play in renewable utilities. BEP is one of the largest renewable power platforms that is accessible by retail investors. Early investors in 2007 would have more than six times their investment for total returns of over 13% per year.
History shows that the renewable utility’s cash flow could be bumpy. Sometimes it’s related to weather conditions that impact the generation of its hydroelectric, wind, and solar power facilities.
Management is committed to paying a growing cash distribution, though. BEP has done so for 11 consecutive years with a 10-year dividend-growth rate of about 5%. It aims to increase its cash distribution by 5-9% per year. It makes sense to expect a more conservative dividend-growth rate of 5%, given its track record. At writing, BEP offers a yield of almost 3.1%.
If you are in for a greener world, join me in investing in these dividend stocks for the long haul! You’ll enjoy a nice, growing passive income in the process.
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.
The Motley Fool has no position in any of the stocks mentioned. Fool contributor Kay Ng owns shares of Algonquin and Brookfield Renewable.