Saturday Jan 28, 2023

2 Red-Hot Renewable Energy Stocks to Buy for 2022 and Beyond – The Motley Fool


After a dud of a 2021, renewable energy stocks are back on investors’ radar. The Russia-Ukraine conflict had had a major role to play in this, as it drove prices of fossil fuels to dizzying heights and triggered such an energy crisis that more nations than ever are now keen to reduce dependence on fossil fuels and adopt renewable energy instead to secure their future energy needs.

Truth is, even before the war struck, renewable energy was silently changing the face of the global energy sector. To give you an example, did you know that renewable sources of energy accounted for 100% of electricity capacity additions in the U.S. in the first quarter this year, up from barely 30% in 2010? 

This chart is just one of the many that gives us an idea about the exponential growth ahead for renewable energy and companies making the right moves to corner niche parts of the industry. Investing in shares of these companies is one of the best ways to make money off the renewable energy megatrend. Here are two such renewable energy stocks you’d want to buy now for 2022 and beyond.

The no-brainer stock to build wealth from renewable energy

You probably know how resilient utilities are to economic downturns and inflation, but what’s even more important to know is that traditional utilities are also rapidly falling out of favor. The industry is changing, and utilities are now setting ambitious clean energy goals to decarbonize. Your best bet now, of course, will be an established utility that’s also killing it in renewable energy. NextEra Energy (NEE -3.36%) is the perfect pick.

NextEra Energy, in fact, owns the largest regulated electric utility in the U.S. and is the world’s largest producer of wind and solar energy. There are three reasons NextEra Energy makes for a no-brainer renewable energy stock to buy: its clout in the industry, confidence in its earnings growth through 2025, and dividend growth.

Image source: Getty Images.

So through 2025, NextEra Energy expects to grow its adjusted earnings per share by 6%-8% off 2022 base, and increase annual dividend per share by 10% through “at least” 2024. Here, you must know that the company has grown its dividend at a compound annual growth rate (CAGR) of nearly 10% since 2006, and that dividend growth has added significantly to shareholder returns over the period. 

NEE data by YCharts

NextEra Energy’s renewable energy arm expects to build up to 30 gigawatts of capacity between 2021 and 2024, which nearly equals its existing renewable energy capacity in operation! With NextEra Energy shares dropping nearly 15% in April so far, it’s an opportunity not to be missed.

Big opportunities in hydrogen

When you think renewables, chances are it’s often only wind and solar or hydropower. Yet, there’s another area that’s garnered a lot of attention lately and is touted to be a massive market in the years to come: green hydrogen, or simply hydrogen produced from electricity generated from renewables. It doesn’t create carbon emissions unlike the traditional method of producing hydrogen, which is why hydrogen fuel cells are so often talked about these days. Hydrogen fuel cells are like batteries that can be refueled using more hydrogen and don’t need to be charged. It’s a promising technology, and one company that seems to be doing it right is Bloom Energy <span class="…….


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