Renewable energy investors have not had much to cheer about over the past several years. The sector as a whole has been on the decline since early 2021, largely underperforming the S&P/TSX Composite Index over that period.
At least part of the sector’s recent skid can be blamed on a sudden surge that occurred from 2019 to 2020. A lot of growth was pulled forward during those two gain-filled years, during which renewable energy stocks across the TSX delivered monster gains. But since then, aside from dividend income, the gains have been few and far between.
I wouldn’t blame short-term investors for not having much interest in the renewable energy sector today. It’s anybody’s guess as to how individual renewable energy stocks will fare in the coming months. But if you’re either a passive-income investor or someone with patience and a long-term time horizon, now could be an incredibly opportunistic time to put some money to work in this beaten-down sector.
With that in mind, I’ve reviewed three top Canadian energy stocks. If you’re looking for passive income or long-term market-beating growth potential, these three companies should be on your watch list.
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Brookfield Renewable Partners
At a market cap of more than $20 billion, Brookfield Renewable Partners (TSX: BEP.UN) is by far the largest of these three stocks. The company boasts not only an international presence but a well-diversified portfolio of renewable energy assets, too.
Brookfield Renewable Partners’s broad exposure to the sector makes it a great all-around company to own. If you were looking for just one renewable energy stock to start with, this would be my suggestion.
At today’s stock price, the company’s dividend yields above 6%. Not bad for a company with a proven track record of delivering market-beating returns.
Northland Power
Northland Power (TSX: NPI) shares a few similar characteristics to Brookfield Renewable Partners.
At a $4 billion market cap, it’s a far smaller company. However, Northland Power does have operations spread across the globe, including a range of different renewable energy sources. The company is another great option for gaining instant, well-diversified exposure to the sector.
Where Northland Power differs from many of its peers is its dividend, which is paid out every month as opposed to quarterly. The dividend is also currently yielding just shy of 7%.
Investors looking to build a dependable stream of passive income should have Northland Power at the top of their watch lists.
Algonquin Power
Algonquin Power (TSX: AQN) differs from the first two companies as it’s not purely a renewable energy company. Instead, it’s a hybrid provider of renewable energy and utilities, which could be an interesting mix for the right investor.
Utility stocks tend to be low-volatile investments, which Algonquin Power has been at times. In recent years, though, it’s been experiencing above-average levels of volatility. But over the long term, I’d count on the company to be a slow-growing, dividend-paying company that investors can count on.
Algonquin Power is for the investor who is looking for exposure to the energy sector, while also limiting volatility and earning passive income — all at the same time.
