The recent proposal from President Joe Biden for a $2 trillion infrastructure package highlights the growing focus on renewable energy and sustainability in the United States. But it doesn't stop with the U.S., as sustainability initiatives grow globally from both corporations and governments. Even if Biden's proposed bill fails to pass, there is an unmistakable movement that will continue in the private sector.

One way to take advantage of the trend is to invest in companies that own and operate renewable energy projects. There are several that fit the bill, but Atlantica Sustainable Infrastructure (AY 0.44%) looks to be the best value for investors right now. 

solar, wind, and transmission lines highlighting renewable energy

Image source: Getty Images.

The right assets

Atlantica's business is spread among North America; South America; and the Europe, Middle East, and Africa (EMEA) region. The company owns renewable energy installed generation capacity, efficient natural-gas-fired generation capacity, electric transmission lines, and water desalination plants. With North America as one of its core geographies, any support in the U.S. for clean energy infrastructure, public or private, will be a potential growth opportunity for Atlantica.

Almost 75% of Atlantica's revenue came from its renewables sector in 2020. And 2021 is starting out strong. The company made just over $300 million in equity investments in 2020, but in the first quarter of 2021, it already had agreed to $280 million in new investments, including the third largest geothermal plant in the U.S. 

In 2020, the company grew its cash available for distribution (CAFD) by 5.5%, but it told investors it expects 2021 growth to be 14.5%, based on the midpoint of its guidance range. Looking out to the medium term, management thinks it will grow distributable cash by 5% to 8%, giving investors good reason to expect past dividend growth to continue. 

AY Dividend Chart

AY dividend data by YCharts.

Cheaper than peers

Atlantica has no plans to slow down its growth investments. Looking beyond this year, the company estimates it will make $300 million in new equity investments at least through 2023. A growing percentage is expected to come from a pipeline of new projects in renewables.

But the current and future growth hasn't caused the valuation to exceed that of its peers. Based on both price-to-free-cash-flow, and enterprise-value-to-EBITDA, Atlantica is currently a better value than either Brookfield Renewable Partners (BEP -1.07%) or NextEra Energy Partners (NEP 0.04%). Enterprise value (EV) is a better way to look at these companies than market capitalization, since EV includes the debt that's used to finance many of their growth investments.

AY Price to Free Cash Flow Chart

AY price-to-free-cash-flow data by YCharts.

A solid income play

Atlantica's dividend also yields more than those peers. With a 4.6% dividend yield, investors are locking in a solid source of income, with the chance that a rising stock price could close the gap versus the approximate 3% yield from Brookfield and NextEra Energy Partners. 

Several factors are coming together at once to make Atlantica Sustainable Infrastructure my top renewable energy stock right now. It has the safety of meaningful dividend income, it's sporting a good valuation relative to peers, and it has plans laid out for further growth.

With the United States already growing clean energy infrastructure, and potentially getting support with federal government investments, there's an added catalyst that could support the company's growth for years to come. Taken together, now is a good time for investors to get in.