Renewable energies are good for the planet and can be good for your portfolio too. Since it is also in the early stages of development, there is the potential to make more money by investing early.
In fact, now is the time to focus on renewable energy as we have peaked, according to Bloomberg. With the new US government advocating renewable energy, there will be many more projects. In a separate note, they expect the cost of electric cars to match ice cream cars in a few years time as battery technology improves.
Now that there are pure renewable stocks, you should know that all of the big players in the utilities sector are actively pursuing renewable energy.
They’re much bigger and could probably buy the all-renewable stocks. You shouldn’t ignore them and understand what their strategy is when it comes to clean energy.
Before we dive into investing in clean energy, let’s find out what is made up of renewable energy. Renewable energies come from natural resources that cannot be depleted, such as water, sun rays or wind, to name just a few.
The most common renewable energy sources are hydropower, sun, wind and geothermal energy. In Canada, hydropower already accounts for 59% of electricity generation.
As you can imagine, all Canadian utilities have clean energy, but they are not solely focused on clean energy but are putting together plans to reduce non-clean energy in order to reduce green gas emissions.
Some facts before you read on:
Top Canadian Renewable Energy Stocks
In contrast to a regular supply stock, stocks of renewable energies must be viewed from a potential perspective. They are not yet feeding the massive population.
They don’t reach their homes like Emera, Fortis or Hydro One. Algonquin Power & Utilities Corp, the largest clean energy inventory by market capitalization, serves 750,000 customers in 12 states. By comparison, Fortis has 3.3 million customers in all of its subsidiaries.
When you invest in stocks, you generally have a three part analysis:
However, with clean energy stocks, you need to expand your insights, and that’s a tough question. Since they must use clean energy to serve their customers, not all acquisitions are spot on, and it is not easy to get a clean energy infrastructure in place where it is needed.
There are several ways that I can envision a renewable energy company growing, either by acquiring or developing clean energy. One is a lot easier than the other and a lot faster. I expect consolidation, but a decent investment in clean energy infrastructure is important to your business and it takes time to develop and see the fruits of the labor.
The downside of the investment thesis: Can a regular utility catch up on its fossil fuel energy generation and convert it into a clean solution? Can they do it faster than the pure clean energy stocks?
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As we mentioned earlier, take a look at all of the utility stocks before focusing on just the pure energy stocks. Here is the list of Canadian utility stocks sorted by market capitalization.
Get your list of STRONG dividend growth stocks
Top 3 renewable energy stocks
According to the Dividend Snapshot Opportunity Score – a purely quantitative approach – the following top Canadian bank stocks are listed. If the score is within a range of 5 to 10, then you really need to review the qualitative aspect of the company.
Before we identify the top 3 stocks, here is the full list of dividend stocks for renewable energy.
# 1 – Algonquin Power & Utilities Corp.
Algonquin Power & Utilities is a diversified utility company in North America with total assets of $ 10 billion. The company is engaged in the generation, transmission and distribution of water, gas and electricity to communities in the USA. It also has a renewable energy business.
As a growing renewable energy company, Algonquin Power has a strong portfolio of long-term contracted wind, solar and hydropower systems with a total installed capacity of 1.5 GW.
The company is involved in more than 39 clean energy plants through its subsidiaries. Algonquin Power operates through two subsidiaries: Liberty Utilities (64% of 2018 results) and Liberty Power (36%).
The company has more than 50 power generation plants and 20 utilities across North America. Algonquin’s utility business serves nearly 770,000 customers in twelve states over 1,200 miles of electrical transmission lines and 100 miles of natural gas pipelines.
# 2 – TransAlta Renewables Inc.
TransAlta Renewables is a renewable energy company and one of the largest wind power generators in Canada. It is a sponsored vehicle from the TransAlta Corporation.
With more than a century of experience, TransAlta Renewables has extensive experience owning, operating and maintaining a large fleet of power generation equipment.
TransAlta Renewables owns and operates 21 wind farms, 13 hydropower plants, seven natural gas plants, one solar plant and one natural gas pipeline in the USA, Canada and Australia. Highly contractually agreed facilities for generating electricity from renewable sources and natural gas as well as long-term contracts with strong counterparties ensure a stable cash flow for the company.
Most wind, water and gas plants have years of experience in terms of operational history and performance. TransAlta Renewables owns renewable energy facilities in various regions and multiple technologies.
The company has more than 2,400 MW of net generating capacity, either directly or through economic interests, and is strategically located to supply growing industrial regions.
# 3 – Brookfield Renewable Partners LP
Brookfield Renewable Partners is a globally diversified owner and operator of renewable energy assets. It is a subsidiary of Brookfield Asset Management, a large global infrastructure company that owns 60% of the company.
Brookfield Renewable Partners is represented in North America (60% of the operating portfolio), Brazil (20%), Colombia (15%) and Europe and Asia (5%).
The company has more than 100 years of experience in power generation and is one of the largest public purely renewable energy companies in the world. Hydropower makes up the bulk of the Brookfield portfolio (75% of the operating portfolio), followed by wind and solar (the remainder 25%).
The company has $ 47 billion worth of power assets, 880 generation assets, and more than 17,400 MW of renewable energy capacity. Brookfield Renewable Partners ‘large portfolio of assets in politically stable countries and the growing demand for renewable energy sources are Brookfield Renewable Partners’ greatest strengths.
The company has a good view of secured cash flows, as nearly 90% of them are under long-term power purchase agreements with creditworthy counterparties.
Opportunity Score Formula
The top 5 stocks mentioned above are based on a rating calculated using a range of financial data points from the companies. In the end, the score is generated from the following five key indicators:
- 52 week range: Trend over the last 52 weeks. Is the stock pulling back from a 52-week high?
- P / E ratio: Does the stock price drain from his winnings?
- Sales growth: Is sales growing? Growing income is important. We don’t just want to be fooled by share buybacks and cost management.
- Dividend yield: Are the returns attractive? Typically, a pullback can be seen when the yield starts to rise, or a major problem if it is too high.
- Dividend growth: Uses dividend growth and the chowder rule. Is the company able to consistently increase the dividend?
- Payout ratio: Uses historical averages to put today’s ratio into perspective. Will the company be able to grow its dividend at the same rate that it is growing its earnings?
The number of points generated is intended to evaluate an entry point option based on historical and current figures. The quality of the business is completely ignored, the quality of the company can be judged by any investor. My stock selection process breaks down the quantitative and qualitative valuations that investors should set in order to pull the trigger before buying.
If you are interested in more details, the Canadian Dividend Screener offers a lot more data points to help you make your investment decision.
Investing in dividend growth works, and you can make a healthy retirement income, but you need to buy individual stocks. If you’re unfamiliar with holding individual stocks, you can always buy dividend ETFs or consider various passive income ideas for a retirement income.
My portfolio has had an annual return of over 12% since 2009. it’s from 2009 !!! That’s a constant return, which means that after the rule of 72 I double my portfolio every 6 years.
My approach is simple, but you need key data that I created using the Dividend Snapshot Screeners. No other investment service offers you easily understandable data, but also usable data. No hidden magic.
In fact, I’ve tried all of the securities services for dividend investors like a crash test dummy for securities services. Just ask me and you will see why I couldn’t use anything out there and create the Dividend Snapshot Screener.