MENU

Build A Green Portfolio With These 4 Renewable Energy Plays: Greencoat UK Wind PLC, SSE PLC, Good Energy Group Plc & National Grid plc

As the UK’s leading electric power transmission network, National Grid (LSE: NG) is instrumental in helping the UK meet its renewable energy goals. 

So, it’s a good job that the company is committed to a renewable future. National Grid was recently awarded a top spot on Newsweek’s Top Green Companies in the World 2015 list. National Grid ranked 29th overall but was the highest scoring utility. 

The Newsweek Green Rankings rank the 500 largest publically traded companies globally on their overall environmental performance using eight specific indicators. Based on these indicators, National Grid scored an impressive 71.4%.

If you’re looking for a large-cap green investment, National Grid is one of the best picks around. The company currently trade at a forward P/E of 14.7 and supports a dividend yield of 5.2%. 

Wind power

Greencoat UK Wind (LSE: UKW) owns a portfolio of interests in 16 windfarms around the UK. The company’s principal goal is to provide investors with a steady, predictable income. 

The revenue that operating wind farms receive in the UK is made up of two key components: the sale of power produced, and green benefits accredited. All are sold under long-term agreements to utilities who are obliged by law to procure a certain percentage of power from green sources. This gives Greencoat a stable, predictable income and cash flow stream. 

When Greencoat came to market during 2013, management announced that the group would be paying an annual dividend yield in the region of 6%. The payout will increase in line with inflation for the foreseeable future. At present, Greencoat supports a dividend yield of 5.3%, and analysts have pencilled in a yield of 5.5% for 2016. 

Biggest supplier 

SSE (LSE: SSE) is the leading generator of electricity from renewable sources in the UK. The company had 3,326MW of renewable capacity by the end of March 2015 — to put that into perspective, Greencoat’s net capacity is a lowly 271.5MW. 

SSE’s green drive and contribution to renewable energy generation in the UK has not gone unnoticed. The company has made it into the top 10% of the Climate Performance Leadership Index; one of the most important annual assessments of how large global operations impact on the environment.

SSE’s growth and output of renewable electricity contributed to a 15% fall in the group’s carbon emissions during 2014.

SSE currently trades at a forward P/E of 13.9 and the company supports a dividend yield of 5.7%.

Customers come first 

Small-cap utility Good Energy (LSE: GOOD) generates all of its electricity from renewable sources. What’s more, the company is also loved by its customers and has one of the highest customer satisfaction rates around. 

Still, with only 51,500 electricity customers at the end of 2014, Good is an energy minnow. Revenue jumped by 43% during 2014, and gross profit rose by 38%. However, due to a fall in demand for energy over warmer periods, Good’s profit before tax slumped by a third.

Unfortunately, erratic earnings growth is set to continue for the next two years. The City believes that Good’s earnings per share will fall 15% this year, before rebounding by 53% during 2016. Over the same period, revenue is set to grow by a quarter. 

Good currently trades at a forward P/E of 14.7 and supports a dividend yield of 1.5%. 

Hidden gem

Here at The Motley Fool we're always on the lookout for the market's hidden gems, and we recently stumbled across a company that files under the radar of most investors.

The company in question is led by a renegade CEO, and the group has the potential to increase profits by 300% to 500% over the next few years.

We believe that this could be one of the market's last undiscovered gems.

So, our team of top analysts has put together this FREE report on the opportunity. 

This is something you do not want to miss, and we're offering you the chance to find out more for free right now -- just click here

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.