Thinking about investing in the Canadian energy sector for the long haul, aiming for wealth accumulation? There are some interesting avenues to explore beyond just traditional oil and gas. With $5,000 to invest, focusing on energy stocks involved in renewable energy and stable utility services could be a smart move. These areas are really important as we move towards a more sustainable energy future. Let’s take a look at three Canadian energy stocks that fit this bill. These stocks are Brookfield Renewable Partners (TSX: BEP.UN), Northland Power (TSX: NPI), and Hydro One (TSX: H).
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BEP
First up is Brookfield Renewable Partners. The energy stock is a big global player in the renewable power space, with a diverse portfolio that includes hydroelectric, wind, and solar power facilities. Looking at results for the second quarter of 2024, it reported funds from operations (FFO) of US$339 million. This was a nice 9% increase from the year before. That works out to US$0.51 per unit.
This growth was driven by new projects coming online, recent acquisitions they’ve made, and strong pricing for their power, especially in North America. Brookfield Renewable is also expecting to see a solid 10% or more growth in their FFO per unit for the entire year. It seems to be on a good track in the growing renewable energy market.
NPI
Next, we have Northland Power. This is another key company in the renewable energy sector, but it also has a focus on efficient natural gas and solar power, in addition to offshore wind. In the second quarter of 2024, Northland reported sales of $529 million, up from $472 million in 2023. The net income saw a significant jump to $262 million from just $22 million the year before.
The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), a measure of their operating profitability, also rose to $268 million. This shows Northland’s operations are performing well, and the growth strategy is paying off. The focus on things like offshore wind projects, such as the Hai Long project in Taiwan, positions it well for future growth in the renewable energy landscape.
Hydro One
Finally, let’s talk about Hydro One. This is Ontario’s largest provider of electricity transmission and distribution. Unlike the other two, it’s more of a stable utility energy stock. Looking at results for the second quarter of 2024, Hydro One reported basic earnings per share of $0.49, compared to $0.44 in the same period of 2023.
This increase was mainly due to higher revenues coming from rates approved by the Ontario Energy Board for 2024 and higher average electricity demand during peak times. Hydro One provides a pretty consistent and regulated service, which can offer a bit more stability to an investment portfolio.
Bottom line
If you were to split your $5,000 investment equally among these three companies, you’d be putting roughly $1,666.67 into each. This would give you a balanced exposure to both the growth potential of the renewable energy sector. This kind of diversification can help to reduce your overall risk while still allowing you to potentially benefit from the long-term trends in the energy market.
By investing in these companies, you’re not just aiming for your investment to grow; you’re also supporting the shift towards a more sustainable energy future. As the world increasingly prioritizes renewable energy and the development of related infrastructure, these energy stocks are well-positioned to benefit from these important trends.
All together, spreading your $5,000 investment across Brookfield Renewable Partners, Northland Power, and Hydro One offers a strategic mix of growth potential and stability in the Canadian energy sector. This approach aligns with long-term investment goals and supports the important transition to more sustainable energy solutions.
