Alternative Energy Stocks: A Guide to Investing in New Energy - Saving Advice Articles
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Should You Invest in Alternative Energy Stocks?

By , October 12th, 2017 | No Comments


Investing in alternative energy
In our society, energy plays an enormous role. It powers our cars, homes, and lives. Without energy, we would not be able to charge our devices that never seem to leave our side. Traditionally, our energy has come from fossil fuels such as coal, oil, and natural gas.

In recent history, however, a change has occurred. Because the use of fossil fuels causes carbon emissions which prove to be harmful to the ozone layer, we needed to figure out a better way to create energy. In comes renewable energy. The use of the sun, wind, and water has enabled us to create energy. As time goes on, our technology will improve, and renewable energy will become less expensive, more prevalent, and more efficient. Here are some companies that are helping us do just that.

Best Alternative Energy Stocks

Before I list the following alternative energy stocks and their statistics, let me start by telling you what the statistics are. Market cap refers to the size of the company. It is figure by multiplying the number of outstanding shares to the stock price. The yield is the company’s dividend. It is a percentage of the share price and is paid out throughout the year. And year-to-date performance is how the stock has done since January 1. Here are, in my opinion, stocks that show the most upside for this industry.

  • Brookfield Energy Partners (BEP) – This company uses wind and water to create energy. They are based in Bermuda, but operate in the United States, Canada, and Brazil. BEP has a market cap of 5.6 billion and yields 5.58% which gives it a sizable dividend. It’s year-to-date performance at time of writing is 15%.
  • Vestas Wind (VWDRY) – Vestas sells equipment for wind energy. They also service the equipment and the facilities they sell to. They are based out of Denmark and have a market cap of 19 billion. The yield is small compared to other renewable energy companies at .96%, but the performance from the start of the year more than makes up for it at a whopping 50%.
  • Pattern Energy Group (PEGI) – PEG constructs, owns, and operates facilities used for wind energy. Pattern Energy has a market cap of 2.1 billion and yields an astounding 6.97%. In addition to the high yield, Pattern’s performance year-to-date is 28%.
  • Covanta Holding Corp. (CVA) – Covanta is one of the more remarkable companies as its main function is to turn waste into energy. The market cap for CVA is 1.9 billion and has a high yield as well, at 6.64%. The performance for Covanta from the beginning of the year is flat.
  • Atlantica Yield (ABY) – ABY has a diversified portfolio of renewable energy facilities and has a market cap of 2 billion. The yield for Atlantica is not as high as the previous two companies, but still very impressive at, 5.09%. Similar to Covanta, however, ABY has had little performance year-to-date.

ETFs Investing in Energy

The companies listed above are some of the largest in the renewable energy realm. That said, investing in individual companies come with risks. That’s not to say the funds aren’t risky, but most of those investments have numerous companies they invest in. Below are two ETFs that invest in renewable energy companies

  • Guggenheim Solar (TAN) – This ETF is one of the biggest that participates in renewables with $369 million in Assets Under Management (AUM). The yield for TAN is currently 3.81% and it has a year-to-date performance of 27%.
  • iShares Global Clean Energy (ICLN) – Another large ETF in this space is this iShares ETF. It is more diversified than the Guggenheim listed above because it invests in more than one type of renewable energy and it invests in more than one geographic location. The current yield for ICLN is 3.16% and its performance for the year is 10%.

Conclusion

There are several renewable energy companies available to invest in. When researching these companies, make sure you are doing your homework. Try and stay away from companies that operate and make acquisitions primarily with debt. That is not a sustainable business model. To find out more information about the companies above and other renewable energy companies, I strongly recommend The Motley Fool. You can also check out Saving Advice’s forums for great investing advice. 

All opinions listed are my own and should not be taken as investment advice. Contact a financial professional for personal financial advice.

Photo: Damien McMahon

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