Forget Rivian: Buy These 2 Renewable Energy Stocks Instead

Rivian is one of the more popular names in the stock market today. However, I think these two clean energy stocks are more attractive.

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Last month, Rivian closed one of the most anticipated IPOs of the year. After it was all said and done, Rivian managed to raise nearly US$12 billion, making it the largest American IPO since 2014.

I have been following Rivian’s progress for over a year. Not only was the company aiming to produce high-quality electric vehicles, but it had already received attention from large enterprises. In 2019, it was reported that Amazon placed an order for 100,000 electric vans, which were to be produced by Rivian. However, as of this writing, the company has yet to make a single dollar from sales. Despite that fact, Rivian is valued at US$89 billion, even after falling nearly 40% since the stock peaked in mid-November.

I believe that there’s a lot of opportunity to be had in the renewable energy space. However, investing into a nearly US$90 billion company with no sales seems ridiculous at this point. Fortunately, there are excellent renewable energy companies in Canada. In this article, I’ll discuss two top TSX renewable energy stocks that investors should consider buying instead.

A global leader within its industry

Over the past couple years, the renewable utility industry has been very attractive to investors. That has caused stocks within that industry to skyrocket since 2019. Of note, Brookfield Renewable (TSX:BEP.UN)(NYSE:BEP) has been an excellent market outperformer. Since the start of 2019, Brookfield Renewable stock has gained more than 120%. Unfortunately, the stock has struggled to gain ground this year. Year to date, Brookfield Renewable stock has fallen nearly 23%.

Despite this recent slump in Brookfield Renewable stock, I remain confident in the company. Brookfield Renewable operates a diverse portfolio of assets capable of producing 21,000 MW of power. This makes it one of the largest producers of renewable energy in the world. Upon the completion of its current construction projects, Brookfield Renewable will more than double its current generation capacity. A stock that has managed to produce an annualized return of 18% since its IPO, Brookfield Renewable is giving investors a great entry point right now.

Choose this stock for passive income

If you’re interested in building a source of passive income, there’s also a stock for you! Northland Power (TSX:NPI) is another producer of renewable energy with assets in North and South America, Europe, and Asia. What’s interesting about Northland Power stock is the fact that it pays monthly dividends to its shareholders. Contrary to most other dividend companies, investors don’t have to wait for a payment each quarter. Instead, they can receive a reliable dividend payment each month, providing a steadier source of passive income.

Currently, Northland Power stock pays $1.20 per share on an annual basis. While that may not seem very high, Northland Power’s forward dividend yield is actually very attractive (3.17%). It’s important to note that unlike some other utility companies, Northland Power didn’t have to cut its dividend through the pandemic. This indicates that the company’s management team is able to allocate capital intelligently through difficult times. Northland Power is a top renewable energy stock for income investors.

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.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Jed Lloren owns shares of Brookfield Renewable Partners. The Motley Fool recommends Amazon.

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