Investing in Renewable Energy Stocks

Roberto Rivero
15 Min read

As the world endeavours to combat climate change, renewable energy companies are taking an increasingly prominent role in the global energy supply. Although the transition will take time, it is already underway, and, for those interested in investing in a greener future, there are plenty of renewable energy stocks to invest in.

In this article, we will take a look at investing in renewable energy, examine 2 top renewable energy shares to watch and demonstrate how to invest in renewable energy stocks!

Why Invest in Renewable Energy? 

Renewable energy capacity has been increasing fairly quickly in recent years and, as climate change becomes more and more of a hot button issue, this capacity is likely to continue to grow at a fast rate going forwards.

According to a report by the International Energy Agency (IEA), in 2021, renewable energy sources accounted for around 29% of the world’s total electricity generation, up from 20% in 2010. The IEA estimates that, in order to reach net zero by 2050, this figure will need to increase to almost 61% by 2030.

As renewable energy has begun to supply an increasing amount of global energy, shares of renewable energy companies have performed increasingly well in recent years. If our demand for more environmentally friendly energy continues to grow, then renewable energy stocks are bound to enjoy the benefits of this.

But, which renewable energy shares are likely to perform well over the coming years? What are the best renewable energy stocks to watch in 2024?

To learn more about investing in renewable energy shares, check out our below webinar on the topic, in which expert trader Jens Klatts talks about why green energy stocks deserve a place in your portfolio!

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2 Top Renewable Energy Stocks to Watch

As renewable energy capacity increases worldwide, the number of renewable energy stocks out there also continues to increase. 

With so many shares of renewable energy companies to choose from, it can be difficult to know which renewable energy stocks make a worthwhile investment and which do not. This is why, in the following sections, we have highlighted 2 top renewable energy stocks to watch in 2024.

Renewable Energy Stocks to Watch
Brookfield Renewable
First Solar

Brookfield Renewable Partners

The first on our renewable energy stocks list is Brookfield Renewable Partners.

Brookfield Renewable is one of the world’s leading renewable energy companies, with a total generation capacity of around 26,000 megawatts (MW) spread across a vast portfolio of hydroelectric, wind and solar.

Brookfield Renewable sells the majority of its generated power to utilities and large corporations through long-term, fixed rate contracts – many of which are linked to inflation. These long-term contracts ensure Brookfield receives a predictable, reliable stream of income – a desirable quality for businesses in times of uncertainty.

However, this renewable energy stock has had a disappointing couple of years in the markets. Since hitting an all-time high in January 2021, share price has trended downwards, dropping by more than 40%.

Nevertheless, over the longer term, Brookfield Renewable has rewarded shareholders handsomely. The renewable energy company pays a reliable dividend, which it has increased at least 5% per year over the last 12 years. At the time of writing, Brookfield Renewable has a dividend yield of around 4.6%, making it one of the highest yielding renewable energy dividend stocks.

When we factor in these dividend payments, over the past decade, Brookfield has provided shareholders with a 15% annualised rate of return.

Although recent share price performance may disappoint, Brookfield’s fundamentals have been robust. In 2022, funds from operations grew by almost 8% and Brookfield estimates this figure will increase 10% a year up to 2027.

First Solar

First Solar is one of the world’s leading solar energy companies and has been one of the best performing renewable energy stocks over the last year.

The renewable energy company uses thin film technology to build solar panels which are more efficient - particularly in shaded conditions – last longer and have superior recyclability to other types of panels.

First Solar has grown successfully in recent years, investing heavily in expanding production capacity and has an impressive production backlog which will take it through to the end of 2026.

Despite its heavy investment, First Solar boasts a particularly strong balance sheet. The large amount of cash on its books gives it a good deal of flexibility and the ability to continue investing, expanding and meeting growing global demand for solar panels.

Although, due to soaring costs, the renewable energy stock reported a net loss for the full-year 2022, its loss of $0.41 per share was narrower than had been expected, whilst net sales came in as forecast. The first quarter of 2023 was more positive, with net sales growing year on year and net income per share of $0.40.

Depicted: Admirals MetaTrader 5First Solar Weekly Chart. Date Range: 1 January 2017 – 4 July 2023. Date Captured: 4 July 2023. Past performance is not a reliable indicator of future results.

First Solar has proved popular with those looking to invest in renewable energy recently. In the first six months of 2023, share price jumped 27% and has gained 50% over the last two years.

Renewable Energy ETF

If you are interested in investing in renewable energy, but not keen on picking individual shares of renewable energy companies, a renewable energy ETF may be an option for you.

ETFs, Exchange-Traded Funds, use a pool of investor money to invest in a basket of securities which are picked in order to replicate the performance of an underlying asset, index, sector or economy. This means that ETFs offer investors instant diversification over a number of assets with a single investment, which can significantly reduce the risks of investing.

A renewable energy ETF, therefore, is an ETF which focuses on investing in the renewable energy sector. An example of a renewable energy ETF is the iShares Global Clean Energy UCITS ETF, which tracks the S&P Global Clean Energy Index by holding shares in all the companies that make up the index.

Depicted: Admirals MetaTrader 5 – iShares Global Clean Energy ETF Weekly Chart. Date Range: 11 December 2016 – 4 July 2023. Date Captured: 5 July 2023. Past performance is not a reliable indicator of future results. 

Risks of Investing in Renewable Energy

As with any investment, investing in renewable energy carries risk.

One of the biggest challenges facing renewable energy, is that it competes directly with energy produced from fossil fuels, such as oil.

Depending on seasonality, the sun does not shine at the same strength every day and the wind does not blow at a constant speed. Fossil fuels, on the other hand, can produce constant power and when prices are comparatively low, demand for renewable energy may be negatively affected, which in turn could cause shares of renewable energy companies to fall.

Another risk of investing in renewable energy stocks is changes in government policy. For example, when Donald Trump became President-elect of the USA in 2016, many renewable energy shares fell due to, well-founded, concerns about his potential approach to climate change policies.

How to Invest in Renewable Energy Stocks

If you are wondering how to invest in renewable energy shares, you will be pleased to know that you can do so with Admirals!

An investing account from Admirals allows you to invest in both of the renewable energy stocks highlighted in this article as well as many others including various wind energy stocks and solar energy stocks! Follow these steps to get started:

  • Open an Invest.MT5 account and log in to the Dashboard
  • Find your account details and click ‘Invest’ in order to open the MetaTrader Web Terminal
  • Search for the renewable energy stocks to invest in and open the price chart
  • Click 'Create New Order' at the bottom of the screen, enter the number of renewable energy shares you wish to purchase and click ‘Buy’ to send the order to the market
Depicted: Admirals MetaTrader WebTraderBrookfield Renewable Partners. Date Captured: 23 August 2023. Past performance is not a reliable indicator of future results.

Invest with Admirals 

As well as the renewable energy stocks highlighted in this article, Invest.MT5 account holders can buy shares in over 4,500 other companies from 15 of the largest stock exchanges in the world! Click the banner below to open an account today:

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Renewable Energy Investing FAQ

How Can I Invest in Renewable Energy?

In order to invest in renewable energy, you can buy green bonds or the shares of renewable energy companies. Another option is to invest in a fund which itself invests in renewable energy.

Is Investing in Renewable Energy a Good Idea?

If the world is to successfully tackle climate change, then renewable energy is likely to play an increasingly large role in meeting the world’s energy demands in the coming years. Whilst this means that the sector is likely to grow, it doesn’t mean that investing in renewable energy is without risks and that there won’t be setbacks in the future. Before deciding to invest in renewable energy, be sure to analyse the potential risks as well as the potential rewards.

INFORMATION ABOUT ANALYTICAL MATERIALS:

The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admirals investment firms operating under the Admirals trademark (hereinafter “Admirals”) Before making any investment decisions please pay close attention to the following:

  1. This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
  2. Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
  3. With view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for prevention and management of conflicts of interest.
  4. The Analysis is prepared by an independent analyst Roberto Rivero, Freelance Contributor (hereinafter "Author") based on personal estimations.
  5. Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis.
  6. Any kind of past or modelled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admirals for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
  7. Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.
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