Government laws and investments have given a push to the renewable energy sector in the U.S. Renewable energy accounted for 25% of the country’s total energy in the first half of 2023, making it a record-breaking year for the industry.
The government is making significant commitments and setting aside funds to expand the sector. Hence, several companies are benefitting from the credits and tax benefits. This means investors should start considering the best renewable energy stocks to buy.
Despite the obstacles, the U.S. is setting records in the adoption of renewable energy sources and the next five years will see acceleration in the industry. If you want to make the most of the sector, now is the time to invest in these three renewable energy stocks. Benefit as an early-mover and take home solid gains as the economy improves. Let’s delve in.
NextEra Energy (NEE)
The largest electric utility company in the world, NextEra (NYSE:NEE) is up 17% year-to-date (YTD). It is exchanging hands for $7o as of Tuesday. The company has made investments in the renewable energy sector and enjoys steady income from the utilities business.
It saw a 9% year-over-year (YOY) jump in net earnings to $1.10 per share and added 1,640 megawatts of new solar. It has a backlog of 21.5 gigawatts of renewable projects and has an operating capacity of 34 GW. Additionally, it has 300 GW in the pipeline. Well-positioned in the industry, NEE generates steady cash flow which helps boost the dividend.
Moreover, management is aiming for a 6% to 8% dividend growth through 2027. The best part about investing in this company is that it is building a renewable energy business over a highly successful utility business. As the demand for electricity increases over the years, NextEra Energy’s business will keep expanding.
Also, this is a dividend stock that will keep rewarding every year. The management is aiming for a 10% dividend growth in 2026, and it has a yield of 2.81%.
First Solar (FSLR)
First Solar (NASDAQ:FSLR) had an impressive run in 2023.
The stock is up 51% YTD and over 300% in the past five years. Trading at $262, the rally isn’t stopping anytime soon. When I last recommended the stock, it was trading for $189. If you had bought it then, you’d be sitting on gains of 38%. One of the hottest stocks in the renewable energy space, First Solar still has room to run. It has become the world’s most valuable solar manufacturer.
The anticipated rise in the demand for electricity is set to benefit the company. It makes solar panels and photovoltaic power plants and has a strong presence across multiple industries. The company reported strong first-quarter results with a 44% jump in revenue to $794.11 million and an EPS of $2.2.
Despite competition, First Solar is in an excellent spot right now. It saw a 455% jump in net income and has a booking backlog of 78.3 GW. I believe the company will be able to meet the full-year guidance. Also, it is expanding its manufacturing capabilities and has invested $1.1 billion for the fifth manufacturing unit in the U.S.
Linde (LIN)
Ireland-based Linde (NASDAQ:LIN) doesn’t receive as much attention as it deserves. The industrial gas giant is set to make the most of the soaring hydrogen demand and already holds an edge in the industry. Linde has invested in the hydrogen sector, which shows its commitment to working in the emerging market.
However, the best thing about Linde is its diversified business. It doesn’t rely on any single renewable energy source and can enjoy steady income throughout the year. The company builds equipment that produces industrial gases and it also offers processing services like natural gas plants, synthesis gas plants, and air separation plants.
Trading at $440, the stock is up 7% YTD and 19% in the past 12 months. In the first quarter, the company saw a 10% rise in EPS at $3.75. Linde aims for an EPS of $15.30 – $15.60, with about 8% to 10% growth for the full year.
The company generates solid cash flow which allows it to reward investors and invest in the company without taking on a lot of debt. It has a dividend yield of 1.26% and ended the first quarter with a cash flow of $906 million. Therefore, Linde is a safe and reliable renewable energy stock that can steadily keep moving upward.
On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
