Blink Charging (BLNK -0.21%) has been one of the hottest stocks on the market over the past year and a half as investors pile into anything related to electric vehicles (EVs). But the company, which specializes in EV charging stations, doesn't have much revenue or cash flow to back up its $1.40 billion market cap. Blink generated just $7.2 million in revenue over the past year and reported $22.3 million in net losses. And there's no end in sight to the losses.
If you're looking for exposure to renewable energy stocks without the risk associated with Blink Charging, take a look at dividend stocks like Brookfield Renewable Partners (BEP 0.39%), NextEra Energy Partners (NEP 1.22%), and Hannon Armstrong Sustainable Infrastructure Capital (HASI 1.48%), which can still provide upside without the risk.
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Brookfield's renewable energy play
Brookfield Asset Management (BN 0.75%) is one of the best-known asset managers in the world, and its renewable energy arm is Brookfield Renewable Partners. The latter primarily owns wind, solar, and hydroelectric assets around the world, generating consistent cash flows from the electricity it sells to utilities.
Brookfield Renewable's objective is to grow dividends by 5% to 9% through organic cash flow growth, or reinvesting excess cash into new projects. Management thinks that along with some appreciation in the stock price, this strategy will result in a 12% to 15% annualized return in the long term.
BEP revenue (TTM) data by YCharts. TTM = trailing 12 months.
You can see above that results can be bumpy, but long-term revenue and cash flow are rising as Brookfield Renewable Partners invests in more projects. The dividend continues to grow as well, and while a 3.3% dividend yield might not be the highest on the market, it's backed by great energy projects with decades of life remaining, which is the kind of consistency dividend investors should look for.
The utility-backed renewable giant
NextEra Energy Partners isn't too different from Brookfield Renewable Partners in that it owns renewable energy assets and pays dividends with the revenue generated from selling electricity to utilities. The company owns 5,830 megawatts (MW) of renewable energy assets (4,855 MW of wind and 975 MW of solar), 727 miles of natural gas pipelines, and has recently started to invest in energy storage.
Most renewable energy assets are built with a power purchase agreement (PPA), or a contract to sell electricity to a utility. The average project in NextEra Energy Partners' portfolio has 15 years remaining on its contracted life. And because of the construction of the portfolio to treat dividends as a "return of capital" to shareholders, it's not expected to pay significant federal income taxes for about 15 years.
To grow the portfolio, NextEra Energy Partners leans on its parent company NextEra Energy and its sister subsidiary NextEra Energy Resources, which are two of the biggest renewable energy developers in the world. They can sell projects to NextEra Energy Partners, which keeps the dividend growing.
In 2021, management expects $2.76 to $2.83 in annualized dividend payments by the end of the year, with growth of 12% to 15% through at least 2024. The implied dividend yield of around 3.8% is reasonable, but the expected dividend growth and long-term PPA contracts are what make this a great dividend stock.
The "everything energy" company
Unlike the two previous stocks, Hannon Armstrong doesn't limit itself to investing in wind, solar, energy storage, or other conventional renewable energy projects. It will acquire everything from residential solar assets, to land under solar and wind farms, to financing energy efficiency investments.
This broad range of investments gives the company a very diversified portfolio and allows management to allocate resources where it can get the best yield. For example, the behind-the-meter assets (rooftop solar and on-site energy storage) have generated a higher yield of 8.4% compared to 7.1% for grid-connected assets like large wind and solar farms. So management has weighted its investment to that area, increasing its portfolio yield by 10 basis points to 7.7% in the last quarter.
The current portfolio also has an 18-year weighted average length of cash flows from projects. This will keep cash, and dividends, flowing. The stock's current yield of 2.5% isn't the highest on this list, but this is the most diversified company, and that will play to its favor in the long term.
Better bets than a risky stock
With all three of these companies, investors are getting owners of real, renewable energy assets with predictable dividends for decades to come. They're not speculative, like Blink Charging, and that's why I think they're better buys today.
