Canada’s Clean Energy Leaders: Stocks Leading the Charge

Play the energy transition opportunity with these leading clean energy stocks.

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The solid demand for renewable energy, especially from corporates, focus on energy security, and favourable government policies supporting electrification and decarbonization make clean energy stocks a compelling investment. 

Thus, investors seeking solid long-term returns could add the shares of Canada’s leading clean energy companies. Besides capital gains, investors will likely benefit from regular dividend payouts of these corporations. Against this background, let’s look at three Canadian stocks leading the charge in the clean energy space.

Brookfield Renewable Partners 

Brookfield Renewable Partners (TSX:BEP.UN) is a pure-play renewable energy and a must-have stock to capitalize on the energy transition opportunities. Its diversified portfolio of renewable energy assets (hydroelectric, wind, and utility-scale solar and storage facilities), installed capacity of 31,600 megawatts, and a development pipeline of about 131,900 megawatts makes it a top investment in the green energy space. 

It’s worth mentioning that about 90% of its power-generation portfolio is contracted. Moreover, these contracts have an average duration of 14 years. This adds stability to its cash flows amid all market conditions. Furthermore, about 70% of its revenues come from assets that have protection against inflation. Also, its low-cost infrastructure supports higher gross margins. 

Interestingly, 97% of Brookfield’s debt is of fixed rates, implying it remains immune to the volatility in the interest rates. 

Looking ahead, its investments in power technologies, acquisitions, and commissioning of new capacity position it well to deliver solid growth and enhance its shareholders’ returns through higher dividend payments. The company has been growing its dividend at an average annualized growth rate of 6% for over two decades. Moreover, it targets 5-9% growth in its annual dividend in the coming years. Overall, Brookfield Renewable is an attractive stock for growing wealth and earning steady cash.

Northland Power

From Brookfield Renewable, let’s move to Northland Power (TSX:NPI). The company produces electricity from renewable resources like wind, solar, and clean-burning natural gas. This clean energy company owns and has an economic interest in about three gigawatts (net 2.6 gigawatts) of operating capacity and is a global leader in offshore wind. 

The company focuses on driving the resiliency of its cash flows via long-term contracts with government or creditworthy counterparties. Further, it will benefit from its access to multiple markets and a solid developmental pipeline. Moreover, the company focuses on enhancing its shareholders’ returns through high-quality projects, long-term revenue contracts, growing its asset base, and strategic acquisitions. 

Northland Power is well positioned to benefit from the ongoing energy transition efforts. Further, its high-quality assets and strong cash flows will enable the company to deliver solid capital gains and bolster its shareholders’ returns through regular dividend payments. NPI stock has witnessed a pullback, providing a solid entry point near the current levels.

Capital Power

Shares of power producer Capital Power (TSX:CPX) are another lucrative investment in the clean energy space. It owns diversified power-generation facilities (including renewables and thermal) with about 7,500 megawatts of capacity across 29 facilities in North America. Moreover, it has made significant investments in carbon capture and utilization to reduce carbon impacts.

Capital Power’s contracted power-generation portfolio enables it to generate reliable and growing cash flows. Further, it allows the company to boost its shareholders’ returns through higher dividend payouts. Its stock has grown at a CAGR (compound annual growth rate) of 18.9% in the last three years, which is attractive. In addition, Capital Power raised its dividend at a CAGR of 6% in the past nine years. 

Overall, its steady cash flows, diversified power-generation facilities, investments in clean energy, and a robust pipeline of growth projects augur well for future growth and will drive its dividend and stock price.

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. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.

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