3 Top Renewable Energy Stocks to Buy Right Now
25 Abril 2022 - 7:54AM
Finscreener.org
Most countries are aggressively
looking to switch power sources due to concerns over climate
change. The world is moving from fossil fuels
toward renewable energy
at an accelerated pace. According to
experts, the decarbonization of the world economy will attract $100
trillion worth of investments through 2050, making renewable energy
stocks such as NextEra Energy (NYSE:
NEE),
Brookfield Renewable Partners (NYSE:
BEP), and Clearway Energy
(NYSE:
CWEN) top bets
right now.
Right now, renewable energy
sources including hydro, wind, and solar account for 25% of the
total electricity generated by the power sector. In the past
decade, renewables have increased capacity at an annual rate of 8%
as corporates look to lower carbon footprint by signing long-term
power purchase agreements with renewable energy
companies.
NextEra Energy
One of the largest renewable
energy companies in the world, NextEra has returned over 500% to
investors in the last 10 years, after adjusting for dividends.
Despite its market-thumping gains, NextEra offers investors a tasty
dividend yield of 2.2%.
A key catalyst for NextEra’s
stellar returns is the company’s above-average earnings
growth.
Since 2005, NextEra has increased
adjusted earnings at an annual rate of 8.7%. Comparatively, its
dividend payout has increased by 9.6% annually in this period.
NextEra expects earnings to rise between 6% and 8% through 2023
which suggests dividends should increase going forward as
well.
In Q1 of 2022, NextEra’s adjusted
earnings stood at $1.5 billion or $0.74 per share, increasing by
10.4% year over year. Its strong performance in the March quarter
was driven by NextEra’s Florida-based electric utility
business.
In Q1, NextEra completed 450
megawatts of solar energy projects and aims to complete 9.5
gigawatts of solar energy by 2030. The company’s focus on expanding
its base of cash-generating assets will allow NextEra to increase
earnings by 10% in 2022.
NextEra stock is trading at a
discount of 30% compared to consensus price target
estimates.
Brookfield Renewable Partners
Another renewable energy
heavyweight, Brookfield Renewable is one of the world’s largest
producers of hydroelectric power which accounts for 62% of its
portfolio. Brookfield is also expanding its base of wind and solar
energy assets and sells a majority of the power generated via
long-term power purchase agreements.
Brookfield Renewable Partners has
managed to deliver annual returns of 20% in the last two decades.
Its growth has been powered by a consistent expansion of its
portfolio by acquisitions as well as organic
investments.
Since 2012,
BrookfieldU+02019s
earnings have risen
at an annual rate of 10% while
dividends have grown by 6% in this period. The company expects to
derive returns of at least 20% through 2025 while increasing
dividends between 5% and 9% each year. Right now, Brookfield
Renewable provides investors a tasty forward yield of
3.4%.
Clearway Energy
The final stock on my list is
Clearway Energy which is valued at $6.2 billion by market cap.
After adjusting for dividends, Clearway Energy has returned 134% to
investors in the last five years. Currently, it offers investors a
dividend yield of 4.4%. In Q4 of 2021, Clearway Energy’s cash
available for distribution rose by 16.7% to $35
million.
Further, its CAFD rose by 14%
year over year to $336 million in 2021, which was higher than the
company’s initial forecast of $325 million. Clearway’s dividend
payouts have increased by 7% in the last year and it also invested
$820 million to expand its renewable energy portfolio.
NextEra Energy (NYSE:NEE)
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