Some of the best investments you’ll make when buying stocks to hold for the long haul is when you find the highest-quality companies in an industry that have plenty of growth potential. That’s why top renewable energy stocks are some of the best investments to buy this August.
Countries and businesses all around the world are already investing trillions of dollars in green energy to help transition the world to cleaner energy sources. In addition, the energy industry is one of the most important sectors in our economy, and the global demand for energy is constantly growing every year.
Therefore, top renewable energy stocks could not only offer you significant long-term growth potential as the world transitions to cleaner energy, but it’s possible that the best of the best will continue to offer exciting returns even beyond that.
So, if you’re looking to gain exposure to top renewable energy stocks, here are two of the best to buy right now.
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One of the cheapest renewable energy stocks to buy now
While stocks across multiple sectors have been impacted over the last year, in the renewable energy sector, one of the cheapest stocks to buy now is Northland Power (TSX: NPI).
Trading at roughly $26 a share, Northland is down more than 40% from its 52-week high, a significant fall for a renewable energy stock that is typically quite robust and recession-resistant.
Northland generates electricity from renewable sources such as wind, solar, and natural gas. It owns approximately three gigawatts (net 2.6 gigawatts) of operational capacity and aims to ensure predictable cash flow by securing long-term contracts, typically with government entities or reliable corporate partners.
It also has an impressive development pipeline. In fact, while Northland has 2.6 gigawatts of net operating capacity, it has another two gigawatts under construction or in advanced development. That’s equivalent to 77% of its current operating capacity, showing significant growth potential for Northland in the coming years.
Therefore, while the renewable energy stock is trading undervalued, it’s one of the top investments to buy now. Although management is now guiding to the lower end of its guidance, Northland is still expected to generate earnings before interest, taxes, depreciation, and amortization (EBITDA) of at least $1.2 billion and free cash flow per share of at least $1.30.
So, with Northland trading at an enterprise multiple of 10.5 times, below its 10-year average of 14.3 times, and with its dividend now yielding roughly 4.6%, it’s certainly one of the best renewable energy stocks to buy now and hold for the long haul.
A massive green energy stock with operations all over the world
In addition to Northland Power, there’s no question that Brookfield Renewable Partners (TSX: BEP.UN) is another excellent renewable energy stock to buy now.
Brookfield Renewable boasts 24,000 megawatts of generating capacity with assets spanning five continents, diversified across hydro, wind, solar, and distributed energy.
Much like Northland, the company enjoys consistent cash inflows, mainly from long-term contracts. In fact, even as inflation was surging and impacting the operations of stocks across several sectors over the last year, Brookfield’s EBITDA continued to increase, gaining over 6.5% in 2022.
That means in the last 20 years, only twice did Brookfield’s EBITDA decrease year over year, and one of those years was 2020, the first year of the pandemic. The other year, 2015, its EBITDA fell by just 3.2%.
So, not only is Brookfield a reliable stock that can weather worsening economic environments, but it also offers consistent growth potential, along with an attractive quarterly distribution. Currently, Brookfield offers a yield of roughly 5.2% and has a dividend-growth streak of 13 years.
So, while it trades roughly 30% off its 52-week high, it’s easily one of the best renewable energy stocks to buy now.
