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3 Renewable Energy Stocks You Can Buy and Hold for the Next Decade

By Rekha Khandelwal – Updated Sep 28, 2021 at 8:44AM

Key Points

  • With 20 gigawatts of renewable generation assets, Brookfield Renewable is one of the world's largest renewable energy companies.
  • NextEra Energy Partners is well-placed to grow through project acquisitions from NextEra Energy.
  • Algonquin Power & Utilities grew its dividend by 10% annually in the last decade.

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These stocks have shown consistent performance.

Financial performance of renewable energy companies has often been erratic. Be it rooftop solar or fuel cells, renewable energy space is still evolving. However, that does not mean that there are no steady performers in this emerging segment. Let's look at three renewable energy stocks that you can buy and hold for the long term.

Brookfield Renewable

Energy and power sectors are estimated to account for roughly 75% of global greenhouse gas emissions. Increasing power generation from renewable sources is thus a key focus area to reduce greenhouse gas emissions. One of the world's largest companies in renewable power is Brookfield Renewable (BEP 0.47%) (BEPC 0.31%). It has assets across hydro, wind, and solar sectors.

Windmills by the sea.

Image source: Getty Images.

Brookfield Renewable has 8 gigawatts of hydroelectricity assets, 5 GW of wind power generation assets, and 2.2 GW of solar assets. The company is increasing its focus on solar power and has roughly 17.3 GW of solar assets under development. In all, Brookfield has roughly 20 GW of renewable generation assets. Moreover, the company's generation capacity will more than double with its 31.4 GW of development pipeline.

Since 2012, Brookfield Renewable has invested $7 billion in renewable power projects. More importantly, the company grew its per-share normalized funds from operations by a compound annual growth rate of more than 10% between 2010 to 2020.

Brookfield Renewable rewarded its shareholders with distributions growing at a CAGR of more than 6% in the last decade. With its strong projects pipeline and expected growth in the use of renewable energy, Brookfield Renewable looks set to continue growing its distributions in the coming decade, too. The stock offers a dividend yield of slightly above 3% as of this writing.

NextEra Energy Partners

NextEra Energy Partners (NEP 0.65%) is a limited partnership formed by NextEra Energy (NEE -0.52%) to take advantage of trends in the U.S. energy industry. There is an increasing demand for renewable energy from utilities to meet state RPS (Renewable Portfolio Standards) requirements. NextEra Energy Partners focuses on long-term contracted renewable power projects, which generate stable cash flows.

Young woman looking at solar panels on farm.

Image source: Getty Images.

NextEra Energy Partners has a renewables portfolio of around 6.2 GW. Acquisitions from parent NextEra Energy is a key source of growth for NextEra Energy Partners. Energy Resources, which is NextEra Energy's renewable business segment, has a renewables portfolio of around 16 GW, in addition to a backlog of 15 GW. Moreover, it has potential growth projects of nearly 12 GW. Potential acquisitions from Energy Resources thus provides visibility to NextEra Energy Partners' growth.

NextEra Energy Partners has doubled its distributions in five years. The company expects to grow its per unit distributions by an average annual rate of 12% to 15% through 2024. Overall, NextEra Energy Partners is a great stock to buy and hold for the next decade.

Algonquin Power & Utilities

With two-thirds of earnings derived from regulated electric, gas, and water utilities, Algonquin Power & Utilities (AQN 0.62%) isn't a renewable-only company. But it derives a solid one-third of its earnings from renewable generation. Algonquin has a renewable generation capacity of around 2.3 GW. It plans to spend $3.1 billion on renewable energy projects through 2025. The company intends to maintain the current mix between its regulated utilities operations and renewable energy operations. 

Happy couple holding hands and walking on summer beach.

Image source: Getty Images.

Algonquin Power & Utilities' renewable energy contracts have an average remaining length of 13 years. Long-term contracted assets generate steady cash flows for the company, which in turn allow it to raise its dividend steadily. 

Over the last decade, Algonquin Power & Utilities grew its dividend at a compound annual growth rate of around 10%. The stock is trading at a dividend yield of 4.2% as of this writing. The company's planned projects should continue fueling its dividend growth in future, too. Algonquin Power & Utilities' steady cash flows and dividend growth make it a stock to buy and hold for the long term. 

Rekha Khandelwal has no position in any of the stocks mentioned. The Motley Fool recommends NextEra Energy. The Motley Fool has a disclosure policy.

Stocks Mentioned

Brookfield Renewable Partners Stock Quote
Brookfield Renewable Partners
$27.68 (0.47%) $0.13
NextEra Energy Stock Quote
NextEra Energy
$84.74 (-0.52%) $0.44
NextEra Energy Partners Stock Quote
NextEra Energy Partners
$78.68 (0.65%) $0.51
Algonquin Power & Utilities Corp. Stock Quote
Algonquin Power & Utilities Corp.
$7.28 (0.62%) $0.04
Brookfield Renewable Stock Quote
Brookfield Renewable
$30.93 (0.31%) $0.10

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

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