Canadian investors interested in ESG investing may find renewable energy stocks appealing not just for their potential profitability, but also for the environmental impact of the underlying companies. When evaluating these stocks, it is crucial to consider the return potential. Analyzing three Canadian renewable stocks can provide insights into their performance.
Algonquin Power & Utilities has faced challenges due to poorly managed debt, resulting in the company having to sell a part of its business and significantly reduce dividends to ensure financial viability. Despite efforts to appease investors, the company recently slashed dividends again and is selling a significant portion of its renewable energy business. This development has caused a sharp decline in the stock price, indicating potential risks for investors.
On the other hand, Northland Power, a Toronto-based power producer, boasts a portfolio of green energy assets developed internationally since its establishment in 1987. With a focus on North America, it has a total output capacity of 3.4 GW, with an additional 2.4 GW under construction. The company derives about 90% of its revenues from contracted assets, ensuring financial stability. Its consistent dividend payout of $0.1 per share per month, yielding 5.1%, reflects the stability of this stock. Despite a period of decline, Northland Power may surprise investors with future growth opportunities.
Brookfield Renewable, a renewable energy giant with a market capitalization of $22 billion, stands out with its vast assets and operational capacity. With wind farms generating 11.3 GW and an overall operational power output close to 27 GW, the company has a significant presence in the industry. While its dividend was reduced during the pandemic, Brookfield Renewable has begun increasing payouts, currently yielding 5.8%, close to pre-cut levels. The stability of the stock, combined with the potential for dividend growth, makes it an attractive option for investors.
In conclusion, while the renewable energy bear market continues, there are opportunities for growth with the right catalysts. While Algonquin faces challenges, Northland Power and Brookfield Renewable offer potential for solid growth and dividend income, making them worth considering for investment portfolios.
