As the stock market dynamics continue to change, long-term investors’ hunt for the next big thing is always on. This is mainly because investing in emerging trends has the potential to boost returns on their investments in the long run.
Renewable energy could be a great example of such emerging trends in 2023. As more countries continue to commit to the shift to clean energy across the world, Canadian renewable energy stocks are expected to outperform the broader market in the coming years.
In this article, I’ll highlight two of the best TSX renewable energy stocks you can buy now that also reward their investors with handsome dividends.
Source: Getty Images
Brookfield Renewable stock
Brookfield Renewable Partners (TSX: BEP.UN) could arguably be the most attractive renewable energy stocks listed on the Toronto Stock Exchange today. This Hamilton, Bermuda-headquartered renewable power-focused company has a market cap of $11.2 billion. Its stock currently trades at $30.82 with about 13.2% year-to-date gains, outperforming the TSX Composite, which has advanced by 1.8% in 2023 so far.
Interestingly, Brookfield Renewable has been posting attractive double-digit positive YoY (year-over-year) growth in its total revenue for the last 11 quarters in a row. In the first quarter of 2023, the company’s total revenue rose 17% from a year ago to US$1.33 billion, beating Street analysts’ estimate of US$1.02 billion.
Its funds from operations jumped to US$275 million last quarter compared to US$243 million a year ago. Similarly, Brookfield Renewable’s adjusted quarterly EBITDA (earnings before interest, taxes, depreciation, and amortization) grew positively by 12% YoY. At the same time, it maintained a solid 42% adjusted EBITDA margin for the quarter.
As the renewable energy company continues to focus on new acquisitions and growth initiatives to expand its business presence worldwide, you can expect its share prices to soar further in the coming years. In addition, Brookfield Renewable stock offers an attractive 4.7% annual dividend yield.
Northland Power stock
Northland Power (TSX: NPI) is another fundamentally strong Canadian renewable energy stock you may want to consider in 2023. It currently has a market cap of $6.9 billion, as its stock trades at $27.24 per share after losing nearly 26.6% of its value so far in 2023.
This Toronto-headquartered firm has a large, well-diversified portfolio of clean power infrastructure assets, primarily in North America, Europe, and Latin America, and has more than three decades of experience working on power projects. Last year, the offshore wind segment accounted for over half of Northland Power’s total revenue, while the remaining came from other segments like onshore renewables, efficient natural gas, and utility.
The recent correction in NPI stock could be attributed to its earnings miss in the first quarter of 2023. Northland Power’s sales from the offshore wind segment fell 13% YoY to $346 million last quarter. This YoY decline was mainly because the unusually high market prices it benefited from in the first quarter of 2022, particularly from its Gemini and Spanish projects, didn’t happen again in the first quarter of 2023.
That said, you can expect its YoY financial growth trend to improve in the coming years as the market prices gradually stabilize, which should help its share prices recover sharply. Besides the expected recovery, a decent annual dividend yield of 4.4% makes this renewable energy stock really attractive to buy on the dip.
