Renewable Energy Is The Future


 

hey everyone

Thought I would do a quick post about our most recent purchase. The market continues to be on a tear and things seem to be changing with the way we go about our daily lives.. Obviously covid related, but moving forward one thing is clear. The world wants and needs more renewable energy.

I have said it before oil and gas will be here for awhile still, but politically the writing is one the wall. All the talk is climate change and a move towards more and more renewable energy. Companies are now getting their esg ratings and a simple way to improve them is moving towards green energy.

If I think about one sector that will really be booming in the next 10 years, renewable’s is probably at the top of the list. Of course tech, ev’s and automation is there as well, but I can see governments really pushing towards greener energy moving forward. I’m sure we will see new grants and tax savings towards, electric vehicles and more solar panels etc etc.

Solar Panels

As most of you already know, we have solar panels on our roof. It feels great being green and collecting those pay cheques from hydro one. Personally I think all new builds should be forced to install panels on them. Now I know people will argue the added costs, but the cash flow is great and really pays for itself and helps with the mortgage payments. We keep clear cutting forests and building as many houses as possible in these subdivisions, why not try to go green.. A couple trees on each property doesn’t really do much compared to the dense forest that used to be there.

I really do believe we need to change our behaviour moving forward, and I think we have been doing that with more and more green roofs and alternative energy sources. With more and more people installing panels, the costs will drop and there will be more advancements in this space.

If you want to start to go green but don’t have the capital to install a system, an easy option would be to start investing in renewable energy companies. Personally we own Brookfield Renewable and Algonquin Power in this space. Enbridge and Tc energy both have renewable’s in the portfolio too and are growing their portfolio in them, but their main business is the pipelines.

Growth/ Income / Rising Dividend

You got a guy on 2nd base, guy on first, and a big slugger on the plate. 0 outs. A fastball comes right down the plate and the batter grounds the ball right to the 3rd baseman, he tags 3rd, throws to 2nd, throws to first. A triple play.. Very nice!

That’s what you get with these renewable energy companies. A triple play.. Brookfield renewable and Algonquin power have been some of our best performing stocks. (up 240% on bep and 60% on aqn) They both pay a great dividend and every year those dividends increase. That’s what it’s all about. I see some people saying utilitys are boring and are just for income, but that hasn’t been the case. You get some real stock price appreciation as well..

Of course things can change in a rising interest environment. But with demand so high for green energy moving forward I wouldn’t bet against them. I will say though certain renewable energy companies like brookfield renewable have ran up a little fast, I don’t think they are a steal at the moment (although they have pulled back a bit lately)

Algonquin Power

Algonquin power stands out though, it hasn’t had the same kind of run and at under 20 bucks a share (Canadian), I think its a great buy. Yahoo finance says its p/e ratio is only 11.68. You also get a 3.93% starting dividend yield, that will most likely increase this month. They got a 5 year dividend growth rate of 10.01% and I could see them coming in with a 7-10% increase in May.They have raised their dividend the past 11 years straight.

They also offer a 5% drip discount, which is absolutely fantastic!

renewable energy

Source – Algonquin Corporate Information

I think this picture from their investor relations page speaks volumes.. Lots of growth in the pipeline, that will continue to grow that stock price and dividend!

The Purchase

Last week we added 61 more shares at $19.83 per share, maybe a little early as its cheaper today. But its a long term game, so in 10 years I don’t think I will mind.. This buy adds $39.70 usd to our forward dividend income and hopefully gets that quarterly dividend up enough to drip another share. That’s what it’s all about in the accumulation stage!

The utility sector has become one of our highest sectors in the portfolio and I am always hesitant to add to the higher sectors but if the stock price continues to decline, we will definitely be continuing to buy more Algonquin and Brookfield if the price is right. The demand for renewable’s will only continue to grow moving forward in my opinion.

Conclusion

Well there it is, our most recent purchase. With this one, we now have bought all 3 companies I said we would be buying more of in 2021. Lmt has had a great run since our purchase, but right now my scope is set towards it being our next buy as well, but anything can change.

What have you been buying or watching?

Cheers everyone!



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