President Trump's energy policy favors fossil fuels. However, despite that stance, some of the best-performing energy stocks in recent years have been renewable energy companies Brookfield Renewable (BEP 1.45%) (BEPC -0.52%), Clearway Energy (CWEN -1.24%) (CWEN.A), and NextEra Energy (NEE 0.15%). Since election day, this trio has produced triple-digit total returns, blowing past not only other energy stocks but also the S&P 500.
All three expect to continue thriving over the next several years, no matter who sits in the Oval Office. While a pro-renewable Biden administration could provide an even bigger boost, they have plenty of energy to continue prospering if the current administration remains in power.
Five years of supercharged growth ahead
Brookfield Renewable has thrived over the past four years, generating a nearly 205% total return since election night, which has pulverized the S&P 500's 78% total return and the negative 45% total return from the Energy Select Sector SPDR ETF. The leading global renewable energy producer should have plenty of power to continue producing strong total returns, given its recently updated five-year outlook. The company expects a trio of organic growth drivers (inflation escalators in its existing contracts, margin enhancement activities, and its development pipeline) to power 6% to 11% annual cash flow growth through at least 2025. One of the big drivers of that outlook is its increasingly bright solar development program thanks to the dramatic decline in costs. On top of that, the company expects a steady stream of acquisitions to power another 4% to 5% boost to its bottom line each year.
Add it up, and Brookfield could generate 10% to 16% annual cash flow growth, which is an acceleration from the roughly 10% yearly growth rate it has produced over the last decade. That will give it plenty of power to deliver on its plan to grow its 3.7%-yielding dividend by 5% to 9% per year. Combine that yield with its growth rate, and Brookfield could generate double-digit total annual returns if Trump remains President. Meanwhile, there's lots of upside to that plan if Biden wins and pushes forward with some form of the Green New Deal.
A powerful dividend growth plan
Clearway Energy has also thrived since the last election, generating a 132% total return. One factor powering its impressive performance has been its fast-growing dividend. The renewable energy producer boosted its payout twice this year -- 5% in February and a monster 49% raise in August after a key customer emerged from bankruptcy.
Clearway Energy believes it can grow its now 4.2%-yielding dividend by 5% to 8% per year for the foreseeable future. The clean energy company already has enough expansion-related investments lined up to boost its payout by another 8% in 2021. Meanwhile, its relationships with a global private equity fund and a renewable energy project developer should supply it with a steady stream of expansion opportunities in the future. Add its yield to its growth potential, and Clearway could produce double-digit total returns in the coming years if the current administration remains in power, with upside to that plan if Biden wins and boosts investments in green energy.
Enhanced and extended
NextEra Energy has also thrived under the Trump administration as the renewable-focused utility has generated a more than 165% total return since election day. That upward trend appears poised to continue, given the company's increasingly bright growth prospects.
It recently revved up its outlook by increasing its 2021 earnings guidance and extending its growth forecast until 2023. Powering that enhanced view is the strength of its renewable energy development program. NextEra has plenty of power to keep growing its 1.9%-yielding dividend, which it currently expects to increase by about 10% per year through 2022. As a result, it should be able to continue generating market-beating total returns under a Trump administration.
Meanwhile, there's upside to that growth plan if Biden wins the White House because he'd likely boost investment in renewables. That could help accelerate the adoption of emerging technologies like energy storage and green hydrogen, where NextEra is an early leader.
These energy stocks should keep winning no matter the election night victor
Thanks to the dramatic decline in renewable energy costs in recent years, Brookfield Renewable, Clearway Energy, and NextEra Energy have generated supercharged total returns under the Trump administration. That trio fully expects to continue growing both their cash flows and dividends at above-average rates over the next few years without any additional government assistance. They'll probably keep thriving no matter who sits in the Oval Office during the next four years.