A little uncertainty in the stock market is no reason to be sitting with your cash on the sidelines. Volatile market periods have the potential to create buying opportunities that you won’t want to miss.
Unless, however, you’re investing for the short term. In that case, it’s anybody’s guess as to where the S&P/TSX Composite Index will be trading in the coming weeks. In other words, you’ll have your work cut out for you if you’re looking to turn a quick profit in the stock market today.
If you’re a long-term investor who’s willing to be patient, though, there are a few areas of the market worth watching right now.
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Opportunities in the renewable energy sector
The Canadian renewable energy sector has been in a downward trend on the TSX since the beginning of 2021. Aside from impressive dividend yields, there hasn’t been much for renewable energy investors to get excited about as of late.
It’s worth noting, though, that the sector did experience a massive surge from late 2018 to the end of 2020. Part of the decline since 2021 can be at least partially attributed to a correction from the huge gains earned during the three years prior.
As real as the losses have been since 2021, the renewable energy market remains loaded with long-term growth potential, at least in terms of actual demand for clean energy sources. The market might still be figuring out the correct valuation levels, but the demand for clean energy is not expected to begin slowing anytime soon.
And in the meantime, most of the top Canadian renewable energy providers are currently paying a top dividend. However, when the stocks eventually turn around, the yield will decrease. But for the time being, you won’t find many 5%-yielding dividend stocks on the TSX with long-term, market-beating growth potential.
Brookfield Renewable Partners
At a market cap of $20 billion, Brookfield Renewable Partners (TSX: BEP.UN) is not only a Canadian leader in the space but also an international one.
The company boasts a well-diversified portfolio of renewable energy assets, making it a great all-around renewable energy stock to own. Because of the stock’s broad diversification in the sector, if I could own only one renewable energy stock, there’s no question that it would be Brookfield Renewable Partners.
Like many of its peers, Brookfield Renewable Partners has been trading at a loss since 2021. Shares are down close to 50% since the beginning of 2021, excluding dividends.
In the decade prior to 2021 though, the stock had been a consistent market-beater. However, after shares exploded by more than 150% between 2018 and 2020, it’s only natural to see a pullback after such a sudden surge in gains.
Foolish bottom line
What investors need to ask themselves today is if they are willing to be patient enough to see Brookfield Renewable Partners return to its market-beating ways.
My point of view is that the company has a proven record to believe in, as well as a strong market position in a growing industry.
It could very well be a slow grind back to all-time highs for Brookfield Renewable Partners. But at least while you wait, there’s a 6% dividend yield to enjoy.
