My Favorite Clean Energy Dividend Growth Stocks

I have been investing in clean energy companies for many years.  I have chosen to focus on clean energy dividend growth stocks instead of traditional energy companies like oil and gas producers. Now with the passage of the Inflation Reduction Act (IRA) here in the U.S, clean energy is now again in the news and is a hot topic due to the focus of the government to push for new projects and the financing available for such projects.  The Inflation Reduction Act specifically calls for the following regarding clean energy:

• Expanded tax credits for energy efficient commercial buildings, new energy efficient homes, and electric vehicle (EV) charging infrastructure 
• Expanded clean energy tax credits for wind, solar, nuclear, clean hydrogen, clean fuels, and carbon capture
• Incentivizing domestic production in clean energy technologies like solar, wind, carbon capture, and clean hydrogen
• Clean energy tax credits are increased if the amount of American steel used in wind projects meets the domestic content threshold
• Clean energy tax credits will be increased by 10% if the clean energy projects are established in communities that have previously relied upon the extraction, processing, transport, or storage of coal, oil, or natural gas as a significant source of employment

No matter your political leanings, this is the largest environmental Act passed in the U.S. since the Clean Air Act back in the 1960’s and should push the country more into the clean energy future.  This future will be built on the companies focused on this space, and the money will flow to those companies who already have the capacity, industry knowledge, and size to handle these big projects. The IRA is set to spend over $400 billion and some estimates say it will be closer to $800 billion.  With this in mind, I wanted to highlight my top clean energy dividend growth stocks to consider, and one runner up.

Favorite Clean Energy Dividend Growth Stocks

1. NextEra Energy Partners LP (NEP):   NEP is a wholly-owned subsidiary of NextEra Energy (NEE) and focuses on acquiring and managing contracted clean energy projects in wind, solar and natural gas.  The LP buys clean energy assets from NEE and then establishes long term power contracts with local municipalities, many for decades at a time.  Even though this is a LP, the company issues a 1099-DIV, not a K-1 for tax purposes.

NEP has a fantastic dividend growth record and commitment, raising the dividend quarterly and states it expects to continue with 12-15% increases each year for the next few years at least.  This is on top of a market beating yield right now of approximately 4.2%.  The company has raised its dividend by nearly 15% each year for the past 5 years.  This is my #2 favorite dividend growth stock and my number one clean energy choice.

2. Brookfield Renewable Corporation (BEPC):  BEPC is one of the world’s largest pure-play renewable power companies and focuses on hydroelectric, wind, solar and storage facilities in North America, South America, Europe and Asia.  They also have a L.P. stock ticker (BEP) which is the same company but different tax implications.   BEPC is a corporation and provides a 1099-DIV for taxes.

The global reach of BEPC as well as the backing of one of the largest alternative asset managers in the world in Brookfield Asset Management (BAM), sets this company apart from the competition.  They have the financial resources and industry clout to get the best and biggest deals around the globe.

The company currently pays a 3.8% dividend and expects to raise the dividend between 5-8% a year going forward per their investor presentations.  They have raised the dividend at 5.2% each year for the past 5 years. I have owned BEP for many years and it was my first clean energy investment, and I still hold BEP and BEPC in multiple accounts.

3. Atlantica Sustainable Infrastructure (AY): AY operates a mix of clean energy solutions, including solar, natural gas, and water desalination.  They have 2,048 MW of renewable energy capacity, 343 MW of efficient natural gas-fired power generation capacity, 55MWt of district heating capacity, 1,229 miles of electric transmission lines and 17.5 M cubic feet per day of water desalination. They operate in North and South America and Europe. 

AY is approximately 44% owned by Algonquin Power (AQN), another of my favorite companies, and receives green energy assets from them, among other growth avenues.  Their current dividend yield is approximately 6.7% and the company has grown the dividend at a rate of 13.78% over the past 5 years.

4. Clearway Energy (CWEN.A):  CWEN has assets 2.8 GW of utility-scale wind, 1.1 GW of utility-scale solar, and over 300 MW of community and distributed solar. They also serve as operator and manager of an additional 4.1 GW of assets.  Clearway is one of the largest owner-operators of utility-scale wind and solar across the United States.

The company pays a current yield of approximately 4.8% and has grown the dividend at 5.73% CAGR over the past 5 years.

Runner Up:

Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI): 

HASI is unique in the clean energy industry in that they are structured as a Real Estate Investment Trust (REIT) that focuses on financing investments in climate solutions, providing capital to assets developed by leading companies in energy efficiency, renewable energy, and other sustainable infrastructure markets. Their investment thesis, as listed on their website, is “We will earn better risk-adjusted returns by investing on the right side of the climate change line.”

The company pays a current dividend yield of approximately 5.29% but only a 2.25% 5-year dividend CAGR.

This is just an introduction to these companies.  Further research and due diligence should be conducted to make sure this is a good investment for you and that the valuation metrics are appropriate.  

Disclosure:  I own all the companies listed in this article.