1 Top Canadian Renewable Energy Stock to Buy and Hold for Dear Life

Choosing the right renewable energy stocks can be tricky as you have to take many future-facing variables into account. However, some giants stand out as safe picks.

Adam Othman

Adam is a value investor who is always on the hunt for fantastic undervalued companies that he can share with Motley Fool readers. He follows Warren Buffett and Charlie Munger's investment advice and has completed the Canadian Securities Course. When he's not investing, Adam can usually be found traveling or skiing.

Published August 8, 2024 4:30 pm EDT

It would be too absolutist to say that the golden days of renewable energy stocks are over, but we can’t deny that the initial growth surge is long gone. Many of these stocks are currently in the correction period.

However, just as is the case with the bullish phases, the current bear market phase will be over, too, and then the renewable energy stocks with strong fundamentals and solid growth prospects might experience a new era of long-term growth.

One such stock is Brookfield Renewable Partners (TSX: BEP.UN), which you can buy and hold for a long time.

An engineer works at a hydroelectric power station, which creates renewable energy. — Source: Getty Images

The company

The first distinction Brookfield Renewable Partners has compared to other renewable energy companies in the Brookfield name. To many investors, it appears more stable just because it’s part of one of the country’s largest asset management conglomerates; to an extent, this thought process isn’t wrong.

Brookfield Renewables does have access to resources and expertise that many renewable energy companies do not, and it has allowed the company to develop a massive portfolio of renewable assets spread out across the world.

This includes 8.3 gigawatts (GW) of hydropower, 11.3 GW of wind, 7.2 GW of solar power generation, and 5.7 GW of operational storage capacity. If we include the renewable projects that are still underway, the total capacity becomes quite massive.

The bulk of the renewable infrastructure under the company’s banner is in North America, although it also has considerable assets in South America, Europe, and Asia Pacific.

The stock

The stock experienced decent growth in the last couple of decades until the pandemic. After the pandemic, the stock went through a rapid bull market phase, followed by a brutal correction that caused it to lose roughly 40% of its valuation. It’s currently trading at a 42% decline from its last peak.

While the company’s financials are not very encouraging per se, and it lost money in the last quarter, it is healthy enough compared to many other renewable companies in the country. The company stands out from the opportunity perspective, especially thanks to its international presence.

It’s already tapped into multiple global markets and may identify and leverage unique growth opportunities, allowing it to become profitable by a solid margin.

Its funds from operations (FFOs) are rising, and the stock is also making strategic acquisitions, indicating healthy organic growth. All this points towards a solid renewable energy pick that you can hold for years, even decades.

Foolish takeaway

Even though the long-term capital-appreciation potential that the stock might manifest once it starts recovering from the current slump is reason enough to buy this stock, there are other important factors to consider as well. As a renewable energy stock, it’s a great pick from an environmental, social, and governance investing perspective (if that’s one of your investment goals). It’s also offering a dividend at a generous 5.9% yield.