Tackling Climate Change: How These Renewable Energy Companies Are Surging Ahead

Renewable energy stocks like Brookfield Renewable (TSX:BEP.UN) should be on your watch list.

| More on:

The Canadian wildfires are still raging. The crisis has claimed over 10 million hectares and displaced over 120,000 people so far. Experts agree that this historic wildfire season has been exacerbated by the impact of climate change. 

This crisis may compel corporations and government agencies across the continent to ramp up their investments in renewable energy. Here are the top three Canadian renewable energy stocks that should be on your radar in 2023 and beyond.  

Brookfield Renewables

With over $52 billion of power assets under management, Brookfield Renewable (TSX:BEP.UN) is probably the world’s largest clean energy company. The company’s portfolio already has the capacity to produce 25,700 megawatts annually. It’s now developing assets that could add another 126,000 megawatts within a few years. 

The rapid transition from fossil fuels to green energy has benefited this asset manager. Over the past five years, the stock price has surged 95%. That’s a compound annual growth rate of 14.3% over half a decade. Meanwhile, Brookfield Renewable has also been a lucrative dividend stock. At the moment, the stock pays out a dividend yield of 4.3%. 

Dividends have steadily expanded as well. Over the past two decades, Brookfield’s dividend payout has compounded at an annual rate of 6%. 

If this trend continues, Brookfield’s total return (price appreciation + dividend yield + dividend growth) over the next five years could be roughly 100%. 

Algonquin Power & Utilities

Unlike Brookfield, Oakville-based renewable energy producer Algonquin Power & Utilities (TSX:AQN) has had a rough ride so far. The stock is down 48.9% since hitting a peak in early-2021. Earnings have drifted lower over the past year and the company even had to cut its dividend payout by 40%. That’s never a good sign. 

However, the company seems to be rebounding this year. The stock is up 24.8% year to date. In its most recent quarter, revenue was up 26% while cash from operations was up 70%. Meanwhile, the dividend yield is hovering around 5.1%. That’s reasonably attractive for a renewable energy stock. 

Algonquin isn’t the easiest pick, but it should be on your radar if you’re looking for a rebound story in the renewable energy sector. 

Northland Power

Toronto-based Northland Power (TSX:NPI) is a multi-billion-dollar renewable energy juggernaut that should be on your radar. The company is worth $7.3 billion and operates a vast network of hydro, offshore wind, solar, and green hydrogen facilities across the world. 

However, much like Algonquin, Northland has been under pressure for the past two years. The stock is down 44.5% since hitting a peak in early 2021. It now trades at just 10 times earnings per share, which is arguably cheap and undervalued

Despite the price drop and valuation, Northland’s dividend yield isn’t particularly attractive. The stock offers a modest 4.2% dividend yield, which is lower than the yield on a typical Guaranteed Investment Certificate

However, the company has an ambitious growth plan to add 20 gigawatts of production capacity to its portfolio over the next few years. This could propel cash flows and dividends for patient investors. Keep an eye on this underrated opportunity in the renewable energy sector. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Vishesh Raisinghani has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.

More on Investing

think thought consider
Investing

Should You Buy Couche-Tard Stock Aggressively Before Nov. 25?

Here’s what could help Couche-Tard stock rebound after its upcoming earnings event.

Read more »

calculate and analyze stock
Bank Stocks

4% Dividend Yield? I Keep Buying This Dividend Stock in Bulk!

If you find the perfect dividend stock, you never have to worry about investing again. And that's what you get…

Read more »

Paper Canadian currency of various denominations
Dividend Stocks

Should You Buy the 3 Highest-Paying Dividend Stocks in Canada?

A few dividend stocks saw a sharp correction in November, increasing their yields. Are they a buy for high dividends?

Read more »

oil and natural gas
Investing

Is Imperial Oil Stock a Buy for its 2.3% Dividend Yield?

Imperial Oil (TSX:IMO) stock: A century of dividends, 30 years of growth, and a 2.3% yield that could evolve into…

Read more »

Paper Canadian currency of various denominations
Stock Market

3 No-Brainer Stocks to Buy Right Now for Less Than $120

Here are three undervalued TSX stocks that are positioned to deliver outsized gains to shareholders over the next 12 months.

Read more »

Man holds Canadian dollars in differing amounts
Investing

Have $500? 3 Absurdly Cheap Stocks Long-term Investors Should Buy Right Now

These three cheap stocks offer excellent buying opportunities for long-term investors.

Read more »

money while you sleep
Dividend Stocks

Buy These 2 High-Yield Dividend Stocks Today and Sleep Soundly for a Decade

These stocks pay attractive dividends that should continue to grow.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

$15,000 Windfall? This Dividend Stock Is the Perfect Buy for Monthly Passive Income

If you get a windfall, after debt investing should be your next top option to create even more passive income!

Read more »