A rundown of the 7 best renewable energy stocks and ETFs to invest in this year
Renewable energy is the future and this is a fact. Signs of a shift in the market are already taking place and it's only a matter of time before we see the transition completely phase out the traditional forms of energy that our society has grown used to.
Now as investors, the time has come, while the renewable energy market is still young, to find investments that profit from this situation. There is a serious potential in these kinds of stocks to be drivers of growth and, in the long run, be the staple on which entire countries are dependent. So, investing sooner rather than later is the wisest choice for the future.
That being said, we know that there are a lot of renewable energy companies out there. Some startups showing a lot of promise, and other more established energy companies looking to make a pivot towards the environmentally friendly. Which stocks or ETFs then stand the most to gain for the developing scenario?
Luckily, we've done the hard work of research for you and now present you with a list of the best renewable energy investments you can make this year:
1. Invesco Solar ETF (TAN)
Amount of Assets: $3.57 Billion
For those who are unaware of what an ETF is, exchange-traded funds are bought much like stocks are but do not represent ownership of a part of a single company. Instead, buying ETF stocks gives you access to the profits being made by a host of companies at once. In these kinds of investments, you have the security of a diverse source of income and profit from the market as a whole.
One of the most notable ETFs in the renewable energy market is Invesco Solar ETF. With a portfolio centered mainly on companies that deal with solar energy, Invesco Solar ETF gives you access to the growth of the entire solar energy market rather than staking your profits to the success of a single company. The downside of this though is that Invesco Solar ETF, and ETFs in general, might not have as high a return as you might otherwise expect from more direct investments.
That being said, Invesco Solar ETF offers investors access to the diversification and liquidity of having U.S., European and Chinese companies in one ETF. This company also tracks two dozen solar energy companies such as large players like First Solar (FSLR) and SolarEdge Technologies (SEDG) just to name a few.
2. SPDR S&P Kensho Clean Power ETF (CNRG)
Amount of Assets: $402.31 million
Another well-known ETF, the company offers products and services related to renewable energy such as solar, wind, hydro and geothermal generation, and transmission. Some of the holdings the company currently has includes but are not limited to AES Corp. (AES), FuelCell Energy (FCEL), and SunPower Corp (SPWR).
The company has stakes in various renewable energy companies across the globe with the USA being its main base of operations with over 70% of its investment centered on the companies of that country. The rest is divided among China, Canada, Chile, Switzerland, and Brazil.
The value of SPDR S&P Kensho Clean Power ETF stocks has grown by more than 60% in the past 12 months. Net assets managed by the ETF are roughly around $402.31 million. By the end of 2020, the company also reported an annual total return of 139.56% -- something investors and analysts were very keen on.
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3. iShares Global Clean Energy ETF (ICLN)
Amount of Assets: $6.16 billion
With a total asset value of $6.16 billion, iShares Global Clean Energy ETF is definitely one of the largest renewable energy ETFs available for investment. Their portfolio includes investments in solar, wind, and other renewable power sources globally and their top holdings are energy giants like Plug Power (PLUG), Enphase Energy (ENPH), and Verbund (VER).
What many investors and analysts latch on to is the fact that the company has given a 120% return in just 12 months. Their stocks have also seen gains of 53.26% in the past year as well.
4. NextEra Energy (NEE)
Market Value: $151.42 Billion
As a renewable energy company, one cannot deny that NextEra is one of the foremost of its kind in the market. Living up to its name, NextEra is committed to ushering the change of the energy industry as it is the world's largest generator of renewable energy from the wind and sun.
The company also targets to be 100% carbon emission-free by the year 2035. It is also the owner of Florida Power & Light (FPL), NextEra Energy Resources, NextEra Energy Partners, Gulf Power Company, and NextEra Energy Services.
By the end of 2020, the company saw revenues of $18 billion and boasts stock gains of 11.22%. Though the recent rise of interest rates might prove to hurt the company in the short term, its management has stated that overall they expect to enjoy continued growth in the years to come.
5. Vestas Wind Systems (VWDRY)
Market Value: $235 Billion
With a forward dividend of 1.69 (0.72%), and stock gains reaching 38.63% in the past 12 years, the Danish company is attracting a lot of attention from bullish investors and income investors alike.
Among the wind energy providers, Vestas comes at the lead with a staggering 132 gigawatts of wind turbine capacity in 83 countries. As of 2013, it holds the singular distinction of being the largest wind turbine company in the world. As the company already has the infrastructure in place to make renewable energy generation easy, they're probably an easy choice among investors looking for a company with more experience -- being founded in 1945.
Revenues for the company reached 14,819,000 by the end of 2020.
6. Albemarle Corp. (ALB)
Market Value: $22.22 Billion
The company is based in North Carolina and, along with Sociedad Química y Minera, and FMC Corporation, collectively produce half of the world's lithium supplies. As such, the company's profits in the energy market are almost guaranteed. It also has plans of 100% electric vehicle sales by 2030 and is a founding member of the Zero Emission Transportation Association, a U.S.-based coalition committed to that goal.
The company also has a consistently great track record with 24% a year over the past five years. Revenues for the company reached $3.128 billion by the end of 2020 and a net income of $375 million. The company is also a known giver of quarterly dividends with a current dividend yield of 0.82%. Stock prices have also gained 121.90% over the past 12 months alone.
Though the current forecasts of the company are looking less than stellar -- one should note that the long-term trend shows the company is steadily rebounding from the effects of the pandemic. Its commitment is expressed by the recent announcement of a dividend payout of $0.39 per share, payable in October.
7. Iberdrola (IBDRY)
Market Value: $63.89 Billion
Based in Bilbao, Spain, the multinational utility company is the owner of Scottish Power and a significant part of Avangrid, amongst others. The company is known as the owner of several wind assets. Other projects include the use of European Union funds which will be used in Spain to form a public-private consortium with the company and car manufacturer SEAT to build the first factory for EV batteries; and the plan to invest $4.5 billion over the next four years to provide renewable energy to France. Analysts believe that investments in the company will be strongest in power generation such as hydro, solar, and wind for short-term options of one to three years. Long-term investment into the company should be centered on power storage and power grid enhancements, and the future dominance of EVs and hydrogen fuel energy.
Stocks have gained 2.59% in the past week and total revenue for the company last year was at $34 billion. The company also boasts a forward dividend and yield of 2.04 (4.16%).
And that was the list of the 7 best renewable energy stocks to invest in this 2021. Renewable energy is definitely a must-have addition to your portfolio but, if you're looking to spread your money out to different Eco-friendly stocks, you can diversify with the following:
Stocks like these provide a decent return on even the slowest of markets but, and many analysts believe, they have yet to truly hit their stride. The push for clean energy grows more and more each year and the market has only recently mobilized to meet those demands.
The potential for earning in both the short and long term is limitless if you take advantage right now. All you need to do is practice due diligence with the companies you invest in, work out a good strategy, and invest your money wisely. We certainly hope that in that regard, this article was of help to you.