Guest Contribution by ValueWalk
Over the coming years, demand for clean energy will rise, against the backdrop of growing environmental concerns regarding fossil fuels, and the rapid urbanization of emerging economies in developing regions.
Last year, the global energy market witnessed a slight decrease in growth, due to geopolitical tension and extraordinary weather conditions. However, forward-looking estimates suggest that global energy demand will grow by 3% over the next three years, with renewables set to dominate this trend.
The International Energy Agency predicts that renewable energy generation, including nuclear power, will experience significant growth, as utility companies look to meet growing demand, and governments aim to meet their de-carbonization goals.
You can download Sure Dividend’s list of all utility stocks (along with important financial ratios such as dividend yields and payout ratios) by clicking on the link below:
While widespread growth of renewable energy isn’t without flaws and cumbersome challenges, a key drawing point is perhaps the long-term returns these stocks could provide investors.
At the same time, as the renewable energy market evolves, investors will continue to seek long-term growth stocks, which can provide them with upside potential.
While there are many up-and-coming renewable energy companies now publicly trading, investors should focus on more established, bigger household names. These companies can pay dividends, while at the same time experiencing increased demand and long-term growth.
5 Renewable Energy Stocks For Healthy Dividends
A fresh cohort of large-scale utility and renewable energy companies are now scaling their operations, further diversifying their environmental efforts. This has caught the attention of investors looking to diversify their portfolio to renewable energy companies.
These 5 renewable energy companies pay dividends, while simultaneously exploring new opportunities as the market evolves.
NextEra Energy (NEE)
Opening our list is NextEra Energy (NEE), an American utilities and energy company, with a cohort of subsidiaries, including Florida Power & Light and NextEra Energy Resources, among others.
The last several months have been difficult for NextEra Energy, seeing share prices tumble by nearly 18% year-to-date. Lower than expected revenues reported in the second quarter, led to further declines of NEE shares, with the company reporting $350 million in operating revenue, missing the Zacks Consensus Estimated of $393 million.
The company’s renewable energy business segment reported sales of $293 million, representing a year-over-year decline of 3% for the period.
Despite a tumultuous quarter, NextEra Energy continues to showcase resilience. Economic headwinds, caused by supply chain constraints, inflation, and a higher interest rate environment have made little impact on the company as it seeks to double its renewable energy portfolio in the coming years.
Based on most recent insights, NEE shares provide investors with a 2.75% dividend yield, and the company had planned to raise the dividend yield by 10% every year through 2024.
Healthy cash reserves, steady financial performance, and forward-looking guidance by NextEra Energy to continue raising its dividends over the coming months provide investors with favorable conditions for long-term valuation, but more so, long-term stability as the race for renewable energy begins to warm up.
Northland Power (NPIFF)
Clean energy company Northland Power operates across several regions, with a dominant presence across North America, including Canada and the United States. The company focuses on the production of clean energy through wind, solar, and natural gas.
This year has been somewhat challenging for Northland Power shares, with NPI down 32% year to date, and slightly falling by roughly 1.01% over the one-month period between July and August. However, with share prices down 43% from their 52-week high, there is potential for investors looking for an affordable, outright cheap clean energy dividend stock for long-term growth.
For starters, the latest indications show that shares are trading an average enterprise multiple of 10.5 times, well below the 10-year average of 14.3 times. More than this, dividend yields are currently sitting at 4.69%, and the company witnessed slight cash improvements for the recent quarterly performance for the period ending June 2023.
Based on the current trajectory, NPI shares could help investors, perhaps more novice entrants find a suitable and reliable clean energy investment that presents them with long-term upside potential, despite enduring slight economic turbulence.
Canadian energy producer Enbridge currently has a pipeline of new projects under development, and more on the books that would continue until the end of the decade.
Lucrative investment deals and positive capital reserves of more than $12 billion have helped the company solidify itself as one of the biggest, and perhaps most prominent renewable energy companies across its homeland, and larger parts of North America.
In the United States, Enbridge is undergoing the development of a new low-carbon blue ammonia project that would help further boost the country’s low-carbon energy transition. Elsewhere in Europe, the company is finalizing the details of a new project that would see it be one of the main contractors helping build a new offshore wind farm.
The last six months have been difficult for ENB shares, with performance down by 8.32%, while year-to-date prices have fallen slightly more at 11.86%.
However, new project contracts and the finalization of current projects could help the company steadily build a cash reserve, which could see them reinvesting these reserves in the long term.
For the last 68 years, the company has been paying dividends to shareholders, and between 1995 and 2023, the annual dividend growth rate was steady at 10%. The low-carbon company currently holds a dividend yield of 7.67%, and in December 2022, the company announced a 3.2% dividend increase per share.
Based on current available data, the company increased cutlery dividends to $0.88 per share, for the period ending December 2022. This further helped to boost dividends per share to $3.55 on an annualized basis for 2023.
Brookfield Renewable Corp. (BEPC)
Next on our list is the multinational clean energy company, Brookfield Renewable Corporation (BEPC). Over the last several quarters, the company has been increasingly diversifying its portfolio with renewable energy assets, which currently make up roughly 96% of the overall business.
At the most recent Q2 2023 earnings and financials reporting, the company announced that it currently has roughly 25,900 MW of operating capacity and a forward-looking pipeline development of 134,400 MW.
In terms of operations, North American hydroelectricity generation across Canada, the United States, Brazil, and Colombia is projected to increase. At the same time, the company projects wind power generation to steadily increase across all of its regions, including Asia and Europe.
On top of this, the company declared a dividend payout of $0.34 per share, following recent earnings. What’s more, a current dividend yield of 4.70% and a pay-to-earnings ratio of 15.90 could put BEPC in a position to outpace the market in the coming months.
The upside with Brookfields, in this case, is that some analysts speculate that while share prices have shown signs of trending upwards, many estimate that BEPC remains undervalued, and is a top pick for value investors looking to gain their foothold in the renewable energy sector.
Algonquin Power & Utilities Corporation (AQN)
The last stock option on our list is the Canadian-based Algonquin Power & Utilities Corporation, which sells clean energy through renewable power generation facilities.
The best possible way to describe Algonquin is that it’s an all-in-one type of utility provider. Algonquin holds a strongly diverse portfolio, with renewable operations including hydroelectric, wind, solar, and several thermal facilities located across North America. In addition to this, the company has some regulated electric and natural gas facilities and further oversees water treatment, distribution, and wastewater collection.
AQN has a dividend yield of 5.8%. The company has paid dividends to shareholders for the last 15 years. Over the coming decade, there is a possibility that dividends could combine with attractive upside potential.
Based on recent stock market performance, AQN is the only option on our list that has witnessed positive growth over the last several months. Year-to-date performance is up by 9.46%.
Now that renewable energy will see increasing demand over the coming years, investors are seeking the dividend players that will help present them with major upside potential in the long run as they look to decarbonize their portfolios.
While the renewable energy market has faced adversity, from geopolitical tension, decreasing project funding, and perhaps supply chain constraints, there is an indication that the coming years will not only see a more competitive marketplace but further help to drive innovative products, services, and developments as demand continues to grow on the back of widespread de-carbonization.
If you are interested in finding high-quality dividend growth stocks and/or other high-yield securities and income securities, the following Sure Dividend resources will be useful:
Monthly Dividend Stock Individual Security Research
- 10 Cheapest Monthly Dividend Stocks
- 10 Safest Monthly Dividend Stocks
- 3 Top ‘Hold Forever’ Monthly Dividend Stocks
High-Yield Individual Security Research
- 20 Highest-Yielding BDCs
- 20 Highest-Yielding MLPs
- 20 Highest Yielding Dividend Kings
- 20 Best Ultra High-Dividend Stocks
- 20 High-Dividend Stocks Under $10
- 20 Undervalued High-Dividend Stocks
- 10 Safest Dividend Aristocrats
- 20 Highest-Yielding Dividend Aristocrats
- 20 Highest-Yielding Small Cap Dividend Stocks
- 20 Safe High Dividend Blue-Chip Stocks With Low Volatility
- 12 Long-Term High-Dividend Stocks To Buy And Hold For Decades
- 12 Consistently High Paying Dividend Stocks With Growth Potential
- 10 Super High Dividend REITs
- 10 Highest Yielding Dividend Champions
- 10 Highest Yielding Dow 30 Stocks | Dogs Of The Dow
- 10 High-Yield Dividend Stocks Trading Below Book Value
- 9 Highest Yielding Royalty Trusts
Other Sure Dividend Resources
- Dividend Kings: 50+ years of rising dividends
- Dividend Champions: 25+ years of rising dividends
- Dividend Aristocrats: 25+ years of rising dividends and in the S&P 500
- Dividend Achievers: 10+ years of rising dividends and in the NASDAQ
- High Dividend Stocks: 4%+ dividend yields
- Monthly Dividend Stocks: Individual securities that pay out every month
- Blue Chip Stock: Kings, Aristocrats, and Achievers
- MLPs: List of MLPs and more
- REITs: List of REITs and more
- BDCs: List of BDCs and more