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Got $5,000? Here Are 5 Energy Stocks to Buy and Hold for the Long Term

By Matthew DiLallo - Jun 2, 2021 at 8:35AM

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These companies are focused on the future of energy.

The energy market is in the midst of a dramatic transformation. The global economy is changing power sources, going from carbon-emitting fossil fuels to cleaner alternatives like renewable energy. This shift will take decades and trillions of dollars to complete, making it a megatrend that investors won't want to miss.

Often, the best way to invest in a major trend like this is to purcahse a basket of several similar stocks instead of trying to pick one winner. With that in mind, investors with $5,000 (or any other amount) to invest should consider splitting it into equal amounts across several compelling opportunities. Five that stand out as great options are Brookfield Renewable (BEP 0.32%) (BEPC 0.69%)ChargePoint Technologies (CHPT 4.51%), First Solar (FSLR 5.04%)SolarEdge Technologies (SEDG 3.55%), and NextEra Energy (NEE 0.97%).

A person holding a tablet looking at wind turbines.

Image source: Getty Images.

High-powered growth

Brookfield Renewable is one of the world's largest renewable energy producers. It's a global leader in hydropower and has fast-growing wind, solar, and energy storage businesses. Its existing portfolio generates lots of steady cash flow as it sells the bulk of its power under fixed-rate contracts to utilities and other end-users. 

That gives Brookfield the cash flow to pay an attractive dividend and invest in developing new renewable energy projects. The company believes it can grow its earnings at a 6% to 20% annual rate in the coming years as it develops and acquires new projects. That should enable it to increase its 3%-yielding dividend at a 5% to 9% annual rate. This outlook makes it one of the best renewable energy dividend stocks around.

A highly charged future

ChargePoint Technologies operates one of the world's largest electric vehicle (EV) charging networks. The company has a unique business model. It sells charging stations to residential, commercial, and fleet customers, which generates upfront revenue. On top of that, customers must agree to purchase software and service subscriptions from the company, generating additional recurring revenue. 

Those recurring cash flow streams should steadily grow as ChargePoint expands its network, making it a lower-risk way to invest in the electrification of transportation. Meanwhile, the company has a large growth runway ahead as it expands its EV charging network in the U.S. and abroad.

A top-notch solar panel maker

First Solar is a solar panel manufacturer focused on using thin-film technology, ideal for utility-scale solar energy facilities. The company has built up a sizable manufacturing base to capture the accelerating growth of solar energy. It recently finished its second factory in Malaysia, which not only expands its capacity, but that added scale should also help further reduce costs.

First Solar also boasts a top-notch balance sheet. It's on track to end the year with nearly $1.9 billion in cash. That gives it the financial flexibility to continue expanding its manufacturing capacity and invest in developing even more efficient panels.

A person using an electric vehicle charger.

Image source: Getty Images.

Solar-focused growth, with upside potential

SolarEdge Technologies makes optimized inverter systems that help maximize the power generated by solar panels while lowering the cost of the energy they produce. As the world installs more solar panels, developers will likely need to keep adding the company's inverters to their projects to maximize returns. 

In addition to its inverter solution, SolarEdge has invested in various other technologies to further participate in the energy transition. It's working on solutions to address a broad range of energy market segments, including energy storage, EV charging, batteries, uninterruptable power supply (UPS) systems, EV powertrains, and grid services solutions. Those innovations could help drive accelerated growth for SolarEdge in the coming years while giving investors broad exposure to several compelling smart energy end markets. 

Leading the charge to a cleaner future

NextEra Energy is the world leader in producing power from the wind and sun. The company operates utilities in Florida and a large-scale energy resources business that supplies power to other utilities and end-users. Both businesses generate steady cash flow, giving NextEra the funds to pay a decent dividend and invest in expanding its operations. 

The company anticipates it can grow its earnings per share at a 6% to 8% yearly rate through at least 2023. That should support around a 10% annual expansion in its 2.1%-yielding dividend through at least next year. In addition to that near-term growth visibility, NextEra has ample long-term upside as it expands its existing wind, solar, and energy storage business. Meanwhile, there's even more growth potential ahead if its green hydrogen projects prove to be a commercial success since that fuel could be the key to decarbonizing the energy sector.

A well-rounded renewable energy portfolio

The energy transition megatrend could fuel significant growth for investors in the coming years, and lots of companies could be big winners. That's why investors should consider spreading their bets across several compelling opportunities like Brookfield, ChargePoint, First Solar, SolarEdge Technologies, and NextEra so that they don't miss out by backing a potential dud.

Matthew DiLallo owns shares of Brookfield Renewable Corporation Inc., Brookfield Renewable Partners L.P., First Solar, NextEra Energy, and SolarEdge Technologies. The Motley Fool recommends First Solar, NextEra Energy, and SolarEdge Technologies. The Motley Fool has a disclosure policy.

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Stocks Mentioned

NextEra Energy, Inc. Stock Quote
NextEra Energy, Inc.
$89.78 (0.97%) $0.86
First Solar, Inc. Stock Quote
First Solar, Inc.
$114.51 (5.04%) $5.50
Brookfield Renewable Partners L.P. Stock Quote
Brookfield Renewable Partners L.P.
$40.31 (0.32%) $0.13
SolarEdge Technologies, Inc. Stock Quote
SolarEdge Technologies, Inc.
$323.74 (3.55%) $11.11
Brookfield Renewable Corporation Inc. Stock Quote
Brookfield Renewable Corporation Inc.
$42.17 (0.69%) $0.29
Chargepoint Holdings Inc. Stock Quote
Chargepoint Holdings Inc.
$16.44 (4.51%) $0.71

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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