The Canadian wildfires are still raging. The crisis has claimed over 10 million hectares and displaced over 120,000 people so far. Experts agree that this historic wildfire season has been exacerbated by the impact of climate change.
This crisis may compel corporations and government agencies across the continent to ramp up their investments in renewable energy. Here are the top three Canadian renewable energy stocks that should be on your radar in 2023 and beyond.
Brookfield Renewables
With over $52 billion of power assets under management, Brookfield Renewable (TSX: BEP.UN) is probably the world’s largest clean energy company. The company’s portfolio already has the capacity to produce 25,700 megawatts annually. It’s now developing assets that could add another 126,000 megawatts within a few years.
The rapid transition from fossil fuels to green energy has benefited this asset manager. Over the past five years, the stock price has surged 95%. That’s a compound annual growth rate of 14.3% over half a decade. Meanwhile, Brookfield Renewable has also been a lucrative dividend stock. At the moment, the stock pays out a dividend yield of 4.3%.
Dividends have steadily expanded as well. Over the past two decades, Brookfield’s dividend payout has compounded at an annual rate of 6%.
If this trend continues, Brookfield’s total return (price appreciation + dividend yield + dividend growth) over the next five years could be roughly 100%.
Algonquin Power & Utilities
Unlike Brookfield, Oakville-based renewable energy producer Algonquin Power & Utilities (TSX: AQN) has had a rough ride so far. The stock is down 48.9% since hitting a peak in early-2021. Earnings have drifted lower over the past year and the company even had to cut its dividend payout by 40%. That’s never a good sign.
However, the company seems to be rebounding this year. The stock is up 24.8% year to date. In its most recent quarter, revenue was up 26% while cash from operations was up 70%. Meanwhile, the dividend yield is hovering around 5.1%. That’s reasonably attractive for a renewable energy stock.
Algonquin isn’t the easiest pick, but it should be on your radar if you’re looking for a rebound story in the renewable energy sector.
Northland Power
Toronto-based Northland Power (TSX: NPI) is a multi-billion-dollar renewable energy juggernaut that should be on your radar. The company is worth $7.3 billion and operates a vast network of hydro, offshore wind, solar, and green hydrogen facilities across the world.
However, much like Algonquin, Northland has been under pressure for the past two years. The stock is down 44.5% since hitting a peak in early 2021. It now trades at just 10 times earnings per share, which is arguably cheap and undervalued.
Despite the price drop and valuation, Northland’s dividend yield isn’t particularly attractive. The stock offers a modest 4.2% dividend yield, which is lower than the yield on a typical Guaranteed Investment Certificate.
However, the company has an ambitious growth plan to add 20 gigawatts of production capacity to its portfolio over the next few years. This could propel cash flows and dividends for patient investors. Keep an eye on this underrated opportunity in the renewable energy sector.
