That the world is fast moving towards cleaner, greener energy sources is well known. Based on this it could be expected that green stocks will be in demand not just in the near future but also in the next decade or so. For this reason, I would not want to miss out on holding them in my long-term portfolio. Here are three of them.
#1. Johnson Matthey: EV batteries
The FTSE 100 manufacturing company Johnson Matthey is best known for its emissions reduction systems for vehicles. But it is also making forays into supporting electric vehicles (EV). It has recently set up a plant in Poland to produce materials to be used in EV batteries. Even more recently, it became a part of a consortium of seven organisations that also include the University of Oxford, to develop EV batteries. These are to be solid state batteries that could store more energy and have a longer life span.
#2. SSE: Harnessing wind energy
Another one is the energy utility SSE, which is the UK’s biggest clean energy generator. It also generates thermal energy and is into transmission and distribution of electricity too. However, renewables are its most profitable component, accounting for around half the operating profit in the financial year ending March, 2021. I also like that it pays a dividend and has a healthy yield of around 5%. It is also profitable, which suggests dividend continuity to me.
#3. TRIG: Investing in renewables
The investment company The Renewables Infrastructure Group (TRIG) is another one to consider. The FTSE 250 stock has interests in offshore wind projects. Unlike the other two, it also has the distinction of being an out and out green stock. Its stock price has seen slow growth up to now. In the past five years, it has risen only 22%. This could change though, as the sector receives increasing focus. At the very least, I would have it on my watchlist.
Other FTSE 100 options
I expect that over the next few years, more options for green investing will show up. Already, FTSE 100 companies are moving towards supporting the clean energy business. These include miners like Rio Tinto, that is mining for lithium, a component of electric vehicle batteries.
Then there are the oil companies BP and Royal Dutch Shell that are expanding their business portfolios to include renewable energy as oil demand can slow down over the next decade. National Grid, which generates electricity, is also increasingly focusing on clean energy sources. Even among companies not directly producing or investing in such energy sources, there are those endeavouring to get closer to net-zero.
Essentially, over the next few years, the choice among green stocks could be far wider. I look forward to that, because the current choices have their drawbacks. Some of them may never become entirely green stocks. Others may have interests in polluting fuels and yet others may not give the hoped for returns.
In any case though, I think now is a good time for me to start investing in some of them with an eye to their future potential.
Manika Premsingh owns shares of BP, Rio Tinto and Royal Dutch Shell B. The Motley Fool UK has recommended National Grid. 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.