Renewable energy stocks haven’t picked up the way investors wanted them to. These companies looked to be the next big thing, and granted, they could still be. The transition is coming, but now seems a lot slower than originally anticipated.
Because of this, investors are seeking other options. But I would urge you to consider some of these renewable energy stocks — especially those that provide passive income from dividends.
This is why today I’m going to focus on renewable energy stock Northland Power (TSX:NPI). Northland stock has slumped but offers a monthly dividend for investors. So, let’s look at why you should consider it today.
Source: Getty Images
What is NPI stock?
Northland stock is an independent power product that focuses on building, developing, owning and operating clean energy products. Not only does it operate in Canada but also across North America, Europe, Latin America, and even Asia.
Not only do investors receive diversification geographically, but also through the resources Northland invests in. The company operates clean electricity from wind, solar, hydropower, and even clean-burning natural gas. Its wind power also operates both onshore and offshore, where wind speeds are far higher and should remain the largest segment for the company in the long term.
Yet these last few years have been difficult for Northland stock. Not only has there been a slower pace of growth for the sector, but Northland stock has had to deal with higher interest rates and inflation. This has cut into earnings enough, but more has occurred as well.
What happened?
Northland stock, unfortunately, has also undergone breakdowns in terms of its wind farms, having to make costly replacements at a time when it certainly isn’t ideal. Add onto this that the company hasn’t had the best result, though it did just manage to beat out estimates during its latest quarter.
Northland stock reported its third quarter, which saw sales decrease to $513 million from $556 million in 2022. Profit decreased to $458 million from $484 million, with adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) down to $267 million from $290 million.
However, the company stated that part of this decrease came as there was a huge spike in market prices in Europe in 2022.
“Notwithstanding recent challenges experienced in the offshore wind sector, we delivered on two very significant milestones this quarter for the Company, having achieved financial close on our two offshore wind projects, Hai Long and Baltic Power. Through achieving these milestones, our global team demonstrated again that we have the capability and expertise to develop and finance complex, large-scale projects in multiple jurisdictions.”
Mike Crawley, Northland’s President and chief executive officer
Now what?
So, if you’re considering Northland stock, the question is, what should investors do now? The future looks bright, to be honest — especially for those looking towards a long-term investment. Passive income will come your way through dividends in the meantime. But in the long term, you’ll likely see enormous passive income from returns.
Last year was difficult, and this year was difficult as well. But 2024 could be incredibly different, with Northland stock seeing a return to normal prices as well as its wind farms up and running at full steam.
So, while shares trade at 15.38 times earnings, with a 5.09% dividend yield, it’s a great time to consider the stock — especially as shares continue to edge up, increasing 22% since hitting October lows.
