It is no hidden secret, we need to shift to renewable energy. Everyone seems to think that its just as easy as that, just make the switch. The truth around it though is that its not that simple. Firstly, even to get that renewable energy you still need to use oil. You need to use oil for solar panels, wind turbines and even electric vehicles. Do you think that the plants used to manufacture all of these products are run on renewable energy? Do you think that the transportation used to move the products or finished goods is done with renewable energy? Even the raw goods themselves need to be mined, can you do that using electric vehicles? We don’t have the heavy equipment technology yet to make them electric.
The renewable energy industry still relies on the oil and gas sector for now and very well could for a long time. This recent crash in oil has only just brought the renewable sector down with it as well(not as bad) but that is also due to covid-19. I am currently holding Transalta Renewable(RNW) and they have been hit but they really have not taken as big of a dip as everyone else and have recovered well. They also have not reduced or cut their dividend which could also be a positive for them. Now you may be asking, what about the other renewable companies in North America? Well lets take a look at some of the biggest in Canada and the USA.
US renewable companies:
- NextEra Energy(NEE)NYSE-$114.7(USD) Billion Market Cap, 7.95 EPS, 2.39% Dividend Yield and 61% Dividend Payout Ratio.
- Tesla(TSLA)NASDAQ-$151.8(USD) Billion Market Cap, -4.87 EPS, -940 P/E.
- Brookfield Renewable Partners(BEP)NYSE-$9.10(USD) Billion Market Cap, -0.19 EPS, -188 P/E, 4.47% Dividend Yield.
- SolarEdge(SEDG)NASDAQ-$6.78(USD) Billion Market Cap, 2.90 EPS, 41.4 P/E.
Canadian Renewable Companies:
- Canadian Solar(CSIQ)NASDAQ-$1.13(USD) Billion Market Cap, 2.84 EPS, 6.67 P/E.
- Northland Power(NPI)TSE- $5.94(CAD) Billion Market Cap, 1.91 EPS, 15.93 P/E, 3.94% Dividend Yield and 64% Dividend Payout Ratio.
- Innergex(INE)TSE-$3.16(CAD) Billion Market Cap, -0.66 EPS, 825 P/E, 3.97% Dividend Yield and 122% Dividend Payout Ratio.
- Enbridge Inc(ENB)TSE-$88.7(CAD) Billion Market Cap, 0.99 EPS, 44.24 P/E, 7.40% Dividend Yield and 111% Dividend Payout Ratio.
This lot is quite the mixed bag. Yes the majority of them are strictly into the renewable sector but some of them also very diversified. Being diversified can be very beneficial for companies especially for times like this. I know EVERYONE is in on the Tesla train and I have to admit that I am also somewhat convinced. They have SO much going for them right now with their space program, electric vehicles, hyperloop and they are even back into the solar panels. I do however feel that they are a little over valued but that is just my opinion.
My top 2 favorite on both these lists are Brookfield and Enbridge. Both are very diverse companies in their own ways. Brookfield is diverse because they have their hands in pretty much everything brick and mortar. They produce a whopping 19,800 MW of evergy in facilities all over the world. I talked about their reit in a previous blog post and of course I had to mention them here as well. They are actually also listed on the TSX so if you do not want to pay the exchange fees and get taxed extra hard on their dividend you can go there instead of the NYSE.
Now, I know some of you are saying “Enbridge is just an oil and gas company”. They mostly are yes, but they are an energy company and have a small part in the renewable sector as well. But even that small part puts out over 4,100 MW of energy which is a decent amount. Enbridge does have its ups and its downs due to being an oil and gas company but I agree with their slow and steady transition into the renewable sector. I expect to see them making some future acquisitions into other renewable companies which would hurt them a little at the start but pay off in the future. Like the saying goes “short term pain, long term gain”.
I feel that Renewable Energy should be a part of everyones portfolio because it is the future of energy. It will take time to grow and expand but it is doing so. There are so many more companies than the ones that I have listed, some of which are just penny stocks that could very well be the next Tesla(TSLA) or Brookfield(BEP). Just make sure you always do your due diligence and research as much as possible into your potential future investments.
That is all for today and remember everyone, invest in yourself first.