The Motley Fool

2 renewable energy stocks to buy

Image source: Getty Images

With the demand for green energy set to explode over the next few years, I’ve been looking for renewable energy stocks to buy for my portfolio to capitalise on this trend. Here are two companies I’d buy for my portfolio right now. 

Stocks to buy 

The number of renewable energy stocks in the UK is relatively limited. Therefore, I’ve been looking overseas for other options. One of the best companies I’ve found is NextEra Energy (NYSE: NEE).

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

As of May 2021, NextEra’s the world’s largest producer of wind and solar energy. It’s far bigger than anything we have here in the UK and has substantial economies of scale from its giant renewable energy projects across the United States in Canada. 

Given the company’s size, scale and reputation, it looks as if it’ll be a significant player in the renewable energy sector for the foreseeable future. That’s why I believe this is one of the best stocks to buy in the industry today. It could also benefit from Joe Biden’s $2.3trn infrastructure plan and the president’s commitment to halving US greenhouse gas emissions by 2030. 

As well as the group’s growth potential, the stock also offers a dividend yield of 2.1%. 

However, this company might not be suitable for all investors. Its North American focus means its success is highly dependent on what happens across the pond. Some investors might find it challenging to interpret the laws and developments that occur in the US, which could have a significant impact on NextEra’s business. 

Despite this risk, I’d buy the company for my portfolio of renewable energy stocks today. 

Renewable energy stocks 

Back in the UK, I’d also buy Greencoat UK Wind (LSE: UKW). Put simply, I think this is one of the best stocks to buy in the green energy space. This is due to its exposure to wind energy, extensive portfolio, experienced management team and dividend yield. Indeed, at the time of writing, the stock offers a dividend yield of 5.7%. 

This shareholder payout is funded by income from its portfolio of UK wind farm projects. The majority of the company’s revenue is generated through Power Purchase Agreements. These aren’t fixed pricing agreements, therefore the firm has some exposure to UK power prices.

The structure has its benefits and drawbacks. On the one hand, the company will earn higher profits if power prices jump. On the other, if prices slump, due to oversupply, profits will fall. This could be particularly troublesome for Greencoat, considering the corporation’s elevated level of debt. If profits fall substantially, the firm may have trouble meeting its debt obligations. 

Still, I believe this is one of the best renewable energy stocks to buy today for the reasons outlined above. That’s why I’d buy Greencoat right now. 

Our 5 Top Shares for the New “Green Industrial Revolution"

It was released in November 2020, and make no mistake:

It’s happening.

The UK Government’s 10-point plan for a new “Green Industrial Revolution.”

PriceWaterhouse Coopers believes this trend will cost £400billion…

…That’s just here in Britain over the next 10 years.

Worldwide, the Green Industrial Revolution could be worth TRILLIONS.

It’s why I’m urging all investors to read this special presentation carefully, and learn how you can uncover the 5 companies that we believe are poised to profit from this gargantuan trend ahead!

Access this special "Green Industrial Revolution" presentation now

Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Greencoat UK Wind. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.