The Best Renewable Energy Stocks to Watch in 2023
As the world endeavours to combat climate change, renewable energy sources are increasingly beginning to replace the fossil fuels upon which we were once reliant. Although the process of leaving harmful fossil fuels behind will undoubtedly take time, it is already underway, and for those who are interested in investing in a more environmentally friendly future, there are plenty of promising renewable energy stocks to consider adding to your portfolio in 2023.
In this article, we will take a look at why investing in renewable energy could be a good idea, examine two renewable energy stocks to watch and show you how to invest in renewable energy stocks with Admirals!
Table of Contents
What Is Renewable Energy?
|Renewable energy is energy obtained from sources which are not only naturally and constantly replenished, but which are also virtually inexhaustible.|
For example, the sun is an example of a source of renewable energy, as it constantly shines; although our ability to exploit its energy depends on the season and weather. The same can be said of wind.
Whilst we may think of renewable energy as a fairly new concept, the truth is that mankind has been harnessing nature’s power for centuries. The ancient Greeks used waterwheels for irrigation and milling grain, Europeans used windmills in the 12th century for similar purposes and the Romans used geothermal energy to provide space heating for their buildings as early as the first century.
Renewable energy has certainly come a long way since these early applications and the industry has expanded significantly in recent years. So, is 2023 a good time to invest in renewable energy stocks? And what are some of the best renewable energy stocks to consider?
Why Invest in Renewable Energy Stocks?
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 faster rate going forwards.
|According to a report by the International Energy Agency (IEA), in 2020, renewable energy sources accounted for around 28% of the world’s total electricity generation and the IEA estimates that, by 2030, this figure will be 45%, provided countries stick to new pledges made in 2021.|
As renewable energy has begun to supply an increasing amount of global energy, accordingly, renewable energy stocks 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 continue to enjoy the benefits of this.
However, after particularly strong performances in 2020 - last year, 2021, was not a great year for renewable energy stocks, with oil and gas industries stealing the limelight. But with new pledges made by countries around the world at the COP26 climate conference, we could see a shift back in favour of renewable energy stocks this year.
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 Renewable Energy Stocks to Watch in 2023
As renewable energy continues to increase its capacity worldwide, the number of renewable energy stocks available also continues to increase.
These days, there are many companies dedicated either entirely or partially to the production of renewable energy. Therefore, it can be difficult to know which companies make a worthwhile investment and which do not. This is why we have highlighted two renewable energy stocks to watch in 2023. These renewable energy stocks are:
In the following sections, we will take a look at each of these companies in a bit more detail.
The first of our best renewable energy stocks to watch is Brookfield Renewable. Brookfield Renewable Partners is one of the world’s largest renewable energy producers, with a generating capacity of over 20,000 megawatts (MW) from a combination of hydroelectric, wind and solar. Their portfolio of power generating facilities numbers almost 6,000 across the Americas, Europe, India and China.
Brookfield Renewable sells the majority of its generated power to utilities and large corporations through purchase agreements, which in turn generate a reliable fixed cash flow for the company.
Although this renewable energy stock performed disappointingly in 2021, with share price falling by 17%, its five-year performance (2017 – 2021) is more than 126%. This impressive performance does not factor in quarterly dividend payments, of which Brookfield Renewable is a reliable distributer. At the time of writing, their dividend yield is a respectable 3.4%, making it one of the highest yielding renewable energy dividend stocks.
When we factor in these dividend payments, in the two decades leading to the end of 2020, Brookfield Renewable provided investors with an annualised total return of 20%.
Of course, past performance is not a reliable indicator of future results. However, with a vast number of development projects lined up - which should more than double the company’s current generating capacity, a large amount of cash (more than $3 billion as of November 2021) to facilitate future investment and acquisitions, and the growing global focus on decarbonisation, Brookfield Renewable looks well positioned to continue providing value to shareholders.
Our second renewable energy stock to watch is SolarEdge Technologies a younger company than Brookfield Renewable which, as the name suggests, operates in solar energy.
Solar energy could be one of the ultimate sources of energy on the planet in the future. Nature already provides us with the power; our challenge is to develop technology that can harness that power efficiently enough for it to be a viable energy source going forward.
SolarEdge Technologies is one such company which is dedicated to that challenge and are industry leaders in solar energy. They produce low-cost power optimisers and inverters which are designed to transform solar energy into functional electricity. The company’s focus on producing cheaper power optimisers than their rivals has allowed it to steal a considerable market share.
As we noted earlier, 2021 was not a great year for renewable energy stocks and solar stocks were no exception. Despite posting better results in the first three quarters than in 2020, when the industry was negatively affected by a reduction in US investment, SolarEdge Technologies shed around 12% in the stock market in 2021. However, its five-year performance (2017 – 2021) is an incredible 2,160%.
Unlike Brookfield Renewable, SolarEdge is not yet a dividend paying renewable energy stock, however, this is not surprising given that it was only founded in 2006.
For such a young company, SolarEdge has a considerable amount of cash on the books ($525 million at the end of Q3 2021) which has allowed it not just to invest in expanding production, but also to diversify into other industries, such as electric vehicle charging.
Risks of Investing in Renewable Energy
As with any investment, investing in renewable energy – such as wind energy stocks – carries a risk.
One of the biggest challenges facing renewable energy, is that it competes directly with energy produced from fossil fuels, such as oil. As we mentioned earlier, 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 renewable energy shares to fall.
Another risk of investing in renewable energy 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 Invest.MT5 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!
In order to learn how to invest in renewable energy stocks with Admirals, read the following steps.
- Sign up with Admirals
- Open an Invest.MT5 account
- Download the MetaTrader 5 trading platform
- Press Control + U to bring up the ‘Symbols’ window, where you can search for the renewable energy stocks you wish to invest in. Once located, highlight and press ’Show Symbol’ to add the stock to the Market Watch window
- Locate your renewable energy stock in the Market Watch window on the left-hand side of the screen, right-click and press ‘Chart Window’ to open a price chart
- From the price chart, select ‘New Order’ from the toolbar at the top of the screen in order to bring up the order window shown below. Here, you can select the number of renewable energy shares you wish to purchase before clicking ‘Buy’ to send the order to the market
Invest with Admirals
As well as the renewable energy stocks highlighted in this article, Invest.MT5 account holders can buy shares in over 4,300 other companies from 15 of the largest stock exchanges in the world! Other benefits include:
- Opening an account with a minimum deposit of just €1
- Competitive transaction fees and no account maintenance fee
- Exclusive access to our Premium Analytics portal, at no extra cost!
- Free use of the world’s number-one multi-asset trading platform, MetaTrader 5
To start enjoying these benefits and many more, click the banner below to open an account today:
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