8 'Green' Stocks, Bonds and ETFs for Alternative Energy Investors

With its stated commitment to addressing climate change, there is little question that renewable energy will find strong support with the incoming Biden administration. With the caveat that the sector has already risen sharply, several contributors to MoneyShow.com highlight some long-term ideas for stock, bond and ETF investors seeking to go green. Clif Droke, Cabot Wealth Daily Solar power generation has averaged 49% of new power generation in the last decade, and the International Energy Agency believes the solar industry will see at least 15% growth for the next 10 years, which is good news for U.S. solar panel producers and alternative energy stocks. And after the flagging sales of recent years, solar panels are back in vogue as Covid-related restrictions have meant more people staying home and using more electricity -- and therefore trying to save on their monthly light bills. Shutdowns have indeed been good for the solar industry this year. The industry's benchmark exchange-traded fund, the Invesco Solar ETF , is up over 300% from its March low in reflection of the improving fortunes for publicly traded solar companies. Indeed, solar stocks have been among the market's recent relative strength leaders, thanks to an improved sales and profit outlook for solar providers in the face of increasing Covid restrictions in several states. If ETFs are your bag, TAN is arguably the best option for participating in the alternative energy bull market. The ETF is based on the MAC Global Solar Energy Index and invests at least 90% of its total assets in the solar energy stocks, ADRs, and global depositary receipts that comprise the index. TAN can be volatile at times, so be prepared for a bumpy ride on occasion. But the longer-term path of least resistance for this ETF is up. SunPower makes high-efficiency solar panels for U.S., Europe, and Asia markets. The firm boasted record bookings, along with expanding gross margins, in a third quarter which saw the addition of 10,000 customers. A confident management subsequently raised earnings guidance for Q4. SunPower further reported seeing increased customer demand for its recently launched SunVault and Helix storage solutions, as consumers increasingly turn to solar power to cut their energy bills (its current backlog is 50,000 homes!). All told, it's a solid story and the stock can be considered as an attractive portfolio candidate for growth-oriented investors looking for alternative energy exposure. One of the key demand drivers in the white-hot solar energy industry is microinverters, which convert the DC current from solar panels into AC current that can be used in an electrical grid. Enphase Energy , the world's top supplier of microinverters, is leading the charge toward more efficient solar energy production, and its microinverters are in very high demand. As proof that business is good for Enphase, the firm was able to increase its revenue by 42% sequentially in Q3. But a big reason why Enphase's growth story still has plenty of upside is its just-launched Encharge battery system. The new system will allow homeowners to generate, store, and control energy in a single system for the first time ever. It looks to be a revenue leader for Enphase, as well as justifying a higher share price in the years to come. It's not just solar power that's in high demand right now, but also hydrogen fuel cells, which are benefiting from the expanding trend toward electric cars. Plug Power makes hydrogen fuel cell systems that replace conventional batteries in equipment and vehicles powered by electricity. Demand for PLUG shares among investors can be seen in the fact that the company's recent $1 billion capital raise (its largest ever) was upsized by nearly $100 million. The company's sizable cash holdings should be sufficient to allow management to reach their aggressive longer-term financial goals for the company. Although its top line is expected to keep growing by double digits, Plug Power isn't yet profitable and should thus be considered more of a momentum play. But the seemingly insatiable demand for shares of this fuel cell company, combined with its relentless revenue-generating ability and broader alternative energy trends, should keep the stock price uptrend intact in the months ahead. Chuck Carlson, DRIP Investor Its steady utility services make NextEra Energy appealing to more conservative investors. The dividend yield of nearly 2% provides appeal for dividend investors. Its growth prospects give it appeal to growth investors. And its position as the nation's largest provider of wind and solar energy makes it an attractive investment for green investors. NextEra Energy owns two electric companies in Florida. Florida Power & Light serves more than five million customer accounts in Florida and is the largest rate-regulated electric utility in the U.S. Its Gulf Power Company serves 470,000 customers in eight counties throughout northwest Florida. The firm also owns NextEra Energy Resources, which together with affiliated entities, is the world's largest generator of renewable energy from the wind and sun and a world leader in battery storage. The company's strengths in renewable and clean energy seem well timed given the ongoing transition to clean energy. The company's dividend stream has been growing at a healthy clip, up 61% since 2016. I would expect future annual dividend growth to be in the 7%-10% range. NextEra Energy is not a cheap stock by utility standards. The shares trade at 30 times 2021 consensus earnings estimate of $2.50. Thus, the shares are vulnerable during market corrections. Nevertheless, NextEra is no ordinary utility. Its exposure to growing energy markets, solid dividend growth, and rising bottom line make it a stellar selection in the utility sector. The stock has posted solid gains in recent years. NextEra stock represents a solid total-return investment for any dividend reinvestment portfolio. Sean Brodrick, Wealth MegaTrends Clearway Energy Inc. is in excellent position to benefit from a Joe Biden presidency, as he's repeatedly said he wants to transition the U.S. to a post-carbon economy. That means using more renewables. Clearway reported third-quarter net income of $42 million and adjusted EBITDA of $312 million. Investors were pleased, as CWEN surged 5% during the following day's trading session. Clearway also sports a solid dividend, with a yield exceeding 4% at recent prices. And that dividend is projected to increase 16% per year over the next three years. Atlantica Sustainable Infrastructure plc is already showing a double-digit percentage open gain less than a month after our official recommendation. And the company is poised for more growth in 2021 and beyond, as President-elect Biden has repeatedly claimed he'll boost investment in the nation's physical infrastructure. Management reported third-quarter earnings of $0.86 per share, which beat analysts' expectations by 20%. Annual earnings growth is projected at a massive 5,176%. Favorable industry tailwinds will help Atlantica continue to exceed expectations. And its generous dividend is good for a yield around 5% at recent prices. After growing 9% this year, its dividend is projected to continue growing at 4% per year over the next three years. Roger Conrad, Conrad's Utility Investor Future returns on the iShares Global Green Bond ETF aren't set in stone. But there's still a lot for conservative income seekers to like. The ETF is highly liquid and pays dividends monthly at an attractive indicated annualized yield of 3.43%. But its best feature is the type of bonds it holds: Investment grade green bonds that are used to finance projects deemed beneficial for the environment. Up until recently, I've been highly skeptical of green bonds' worthiness as an investment vehicle. The companies able to issue them have received very low cost financing, which is always a plus for shareholders. But the most attractive issues have been almost exclusively reserved for large institutions. That's left only questionable crumbs for individuals. What's changed now is green bonds are starting to come of age as an asset class. And this iShares ETF is solid proof of that, with 484 high quality holdings from a wide range of countries and industries. Currency exposure is mitigated by the fund's adhering to the Bloomberg Barclays MSCI Global Green Bond Select (USD Hedged) Index. The fund's proof of concept since its November 2018 inception is its 6.3% year-to-date total return. That includes a top-to-bottom decline of just -7.5% in March, a time of extreme stress in global financial markets including currencies. With the U.S. set to rejoin the Paris Accords next year, ESG investing based on environmental, social and governance principles is enjoying an unprecedented boom. That makes it certain green bond issues will continue to mushroom, which means more supply for ETFs like this one to fuel growth, even as growing investor interest continues to drive up prices. The iShares Global Green Bond ETF is a buy up to $58.

8 'Green' Stocks, Bonds and ETFs for Alternative Energy Investors

The renewable energy sector looks especially attractive in light of the incoming Biden administration.

Columnist Conversation

Wednesday on Real Money Pro

S&P Futures

Positive News for a Cannabis Play

COLUMNIST TWEETS

Please Join or Log In to manage and receive alerts.