Renewable energy is a once-in-a-generation investment megatrend. The world needs to invest trillions of dollars in developing additional renewable energy capacity in the coming decades.
As a result, companies that invest in renewable energy should deliver steady growth for decades to come. Brookfield Renewable(NYSE: BEPC)(NYSE: BEP), Clearway Energy(NYSE: CWEN)(NYSE: CWENA), and NextEra Energy(NYSE: NEE) are leaders in renewable energy investment. That makes them the best stocks to buy and hold to capitalize on the multi-decade renewable energy megatrend.
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Brookfield Renewable is a global leader in renewable energy. It operates a diverse portfolio of hydroelectric, wind, solar, and battery-storage assets worldwide. Brookfield sells the clean power it produces under long-term, fixed-rate power purchase agreements (PPAs) with utilities and large corporations with an average remaining term of 13 years. Most of its PPAs link rates to inflation (70% of its revenue). As a result, it generates very stable and steadily rising cash flow.
The company’s existing inflation-linked PPAs alone should deliver low-single-digit annual funds from operations (FFO) per share growth over the next decade. Meanwhile, with demand for power surging due to AI data centers and other catalysts, Brookfield can secure even higher rate PPAs as legacy agreements expire. For example, it recently signed two 20-year hydropower deals with Alphabet‘s (NASDAQ: GOOG)(NASDAQ: GOOGL) Google, representing over $3 billion in future revenue. The company expects margin-enhancement activities like that to add another 2% to 4% to its FFO per share each year.
Brookfield is also investing heavily to expand its renewable energy capacity. It has a vast development pipeline and routinely makes value-enhancing acquisitions. The company estimates that its multiple growth drivers will support FFO per share growth of over 10% annually in the coming years, more than enough to fund its plan to increase its dividend by 5% to 9% each year. With a yield approaching 4%, Brookfield is a top renewable energy dividend stock to buy.
Clearway Energy is one of the country’s largest clean power producers. It owns a large portfolio of wind and solar energy assets along with some critical natural gas generation capacity. Clearway also sells the power it produces under long-term, fixed-rate PPAs with utilities and large corporations.
The clean power company had committed $1 billion to growth investments entering this year, including projects to repower legacy wind farms and acquire newly developed assets upon entering commercial service, several of which support Google’s surging power needs. These secured investments completely support its growth through early 2028. Meanwhile, its parent company, Clearway Energy Group (CEG), has a large pipeline of renewable energy development projects underway that it plans to offer to its affiliate in the future to support its growth. Clearway currently expects to grow its cash flow per share by a 7% to 8% annual rate through 2030.
Clearway Energy has ample growth potential beyond 2030. CEG expects to continue securing new development projects that it can drop down to its affiliate upon entry into commercial service. Additionally, Clearway expects to benefit from rising power prices, organic expansion initiatives (battery storage and repowering investments), and third-party acquisitions. These catalysts should power 5% to 8%+ annual cash flow per share growth after 2030. That should enable Clearway to continue increasing its 4.7%-yielding dividend.
NextEra Energy is a leading electric utility and clean power infrastructure developer. It generates very predictable earnings from government-regulated rate structures and long-term, fixed-rate contracts.
The company expects to invest heavily in building additional renewable energy capacity in the coming years. Its electric utility in Florida (FPL) plans to get 35% of its power from solar energy by 2034, up from 9% in 2024, by continuing to expand its sector-leading solar energy portfolio. NextEra Energy is also building significant renewable energy capacity for third-party customers, including Google. Additionally, it’s developing data center campuses with associated power in partnership with Google and others.
NextEra Energy expects to grow its adjusted earnings per share by more than 8% annually through 2035. That should allow the company to continue increasing its dividend, which yields 2.7%, at healthy rates (6% annual growth expected in both 2027 and 2028).
Brookfield Renewable, Clearway Energy, and NextEra Energy have large-scale and growing renewable energy platforms. They expect to grow their earnings at healthy rates for years to come, which should allow them to continue increasing their dividends. That income and growth combo could enable them to produce powerful total returns in the decades ahead, making them the best renewable energy stocks to buy and hold for the long haul.
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Matt DiLallo has positions in Alphabet, Brookfield Renewable, Brookfield Renewable Partners, Clearway Energy, and NextEra Energy. The Motley Fool has positions in and recommends Alphabet and NextEra Energy. The Motley Fool recommends Brookfield Renewable and Brookfield Renewable Partners. The Motley Fool has a disclosure policy.
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