Investing in companies that are part of expanding addressable markets can help you deliver market-beating gains consistently. One such market is the green energy or renewable energy sector, which is positioned to grow at an accelerated pace over the next two decades.
As countries look to fight climate change, the renewable energy sector is likely to attract billions of dollars in investments, making green energy stocks a solid investment option right now.
Let’s see how you can boost long-term wealth with these three green energy stocks.
Innergex Renewable Energy stock
Over the years, Innergex Renewable Energy (TSX:INE) has successfully built a diversified portfolio of cash-generating assets within verticals such as hydro, wind, and solar energy. These high-quality and long-lasting assets are located across geographies, allowing Innergex to offer an attractive risk-adjusted return on invested capital.
In the first quarter (Q1) of 2023, Innergex reported revenue of $218.3 million compared to $207.7 million in the year-ago period. The company attributed the revenue growth to the recent acquisition of three solar facilities in Ontario, which will add 60 MW (megawatts) of installed capacity to its existing portfolio.
While operating cash flows grew 37% year over year to almost $400 million, free cash flow fell by 15% to $135 million. This increased Innergex’s payout ratio from 89% to 108% in the last 12 months.
Down 57% from all-time highs, the TSX stock also offers you a tasty dividend of 5.1%.
Brookfield Renewable Partners
One of the most popular clean energy companies in Canada, Brookfield Renewable (TSX:BEP.UN) has already returned 373% to shareholders after adjusting for dividends. Despite these stellar returns, BEP stock currently offers a dividend yield of 4.4%, making it attractive to income-seeking growth investors.
In Q1 of 2023, BEP increased FFO, or funds from operations, by 13% year over year. It earned US$300 million from asset sales and has allocated US$8 billion towards new investments, which should increase future cash flows and support dividend raises.
In fact, the renewable energy giant expects the sales of legacy assets to result in net proceeds of US$1.5 billion, which will be deployed in other growth projects.
BEP stock is currently priced at a discount of 14% to consensus price target estimates.
NextEra Energy
The final stock on my list is NextEra Energy (NYSE:NEE) which is a regulated utility and a clean energy behemoth. Its regulated base of cash-generating assets has allowed NextEra Energy to raise dividends each year for almost three decades. In the last 10 years, its dividends have increased by 10% annually, allowing it to pay investors a yield of 2.5%.
With a payout ratio of 50%, NextEra has enough room to increase dividends, reinvest in organic growth, lower balance sheet debt, and target accretive acquisitions.
NextEra’s electric utility business serves more than 12 million customers in the United States. Due to its expanding customer base, analysts project NextEra to improve earnings by almost 9% annually in the next five years.
Valued at a market cap of US$151 billion, NEE stock is trading at a discount of 25% to consensus price target estimates.
