Top 5 Clean Energy Stocks in 2022

Top 5 Clean Energy Stocks in 2022

Woman investing in clean energy stocks

As the world transitions from its heavy dependence on fossil fuels to clean energy sources such as hydroelectric, wind, and solar, the rise of renewable energy is the inevitable future. With the momentum towards green energy building up, clean energy stocks make for a lucrative investment. Let’s take a look at best clean energy stocks Canada has to offer.

Table of Contents

What is a clean energy stock (renewable energy stock)?

A clean energy stock is the stock belonging to a company that produces clean energy or supports other companies that produce clean energy.

The world is in the early stages of making the shift from fossil fuels to renewable energy, but this momentum is slowly building up. 

We are moving past fossil fuels such as coal, petroleum, natural gas, oil, bitumens, and tar sands, to cleaner, greener forms of energy due to the former’s effect on the climate. 

Renewable energy sources are preferable because they are naturally replenished and are considered more sustainable.

Canada is a world leader in the production of energy from renewable resources, as well as its usage. Renewable energy sources provide nearly 18.9% of Canada’s total primary energy supply.

Moving water, wind, biomass, solar, geothermal, and ocean energy are the main sources of clean energy in Canada. Moving water is the most important one providing 59.3% of Canada’s electricity generation, making the country the second-largest producer of hydroelectricity in the world. Wind is the second-most important renewable energy source accounting for 3.5% of electricity generation in Canada, followed by biomass at 1.4%.

As sentiments around energy sources shift, with more and more people supporting the green energy transition, investors are also mimicking this trend. It can already be seen in the price performance of Canadian renewable energy stocks.

Let’s take a look at some of the best renewable energy stocks in Canada!

Best Clean Energy Stocks in Canada

With climate change at the centre of global debate, renewable energy stocks are increasingly becoming a crucial part of any investor’s portfolio. Here are some of the best ones you can invest in:

    1. Algonquin Power Stock (AQN)
    2. TransAlta Renewables Stock (RNW)
    3. Innergex Renewable Energy Stock (INE)
    4. Northland Power Stock (NPI)
    5. Boralex Stock (BLX)
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1. Algonquin Power Stock (AQN)

This $12.02 billion market cap company is headquartered in Oakville, Ontario, and operates across multiple sectors in North America. Through its subsidiaries, Liberty power, and Liberty utilities, it operates water, natural gas, and electricity utilities and provides services to more than one million customers. Founded in 1988, Algonquin currently boasts $11 billion worth of assets.

2. TransAlta Renewables Stock (RNW)

This $4.58 billion market cap company is a monthly dividend payer and offers an attractive yield of 5.50%. Headquartered in Calgary, Alberta, TransAlta has over 44 power-generation wind, hydro, and natural gas assets across North America and Australia. The company’s electricity-producing capacity is 2,537 MW (megawatts), but instead of selling electricity directly to consumers, it has contracts with junior partners and regional industry.

3. Innergex Renewable Energy Stock (INE)

Innergex has a market cap of $3.37 billion, and is headquartered in Longueuil, Québec. It offers a dividend yield of 4.13%. It has 75 operational facilities located in four countries, namely Canada, the USA, France, and Chile. Founded in 1990, the company’s total production capacity is 3,694 MW. In 2020, Innergex harnessed enough energy to power more than 1 million homes.

4. Northland Power Stock (NPI)

Toronto headquartered Northland has a market cap of $8.15 billion. Established in 1987, the company owns and operates clean energy assets across Asia, Europe, Latin America, and North America and is capable of generating 3.2GW(gigawatts) of energy. It produces electricity using solar farms, onshore and offshore wind facilities, and efficient natural gas.

5. Boralex Stock (BLX)

This Kingsey Falls headquartered company with a market cap of $3.4 billion operates several hydroelectric, wind, solar, and thermal facilities across North America and Europe. Boralex’s largest operations outside of Canada are in France. Solar and wind dominate its portfolio, with 9 GW and 16.6 GW production capacity, respectively.

Clean energy stocks under $5

Now, let’s take a look at some cheap, clean energy stocks which have lower barriers to entry, especially for those investors who may not want to invest in blue-chip stocks, and are willing to ride with the volatility of penny stocks.

Denison Mines Stock (DML)

This $1.31 billion market cap company is headquartered in Toronto, Ontario. It is a uranium exploration and development company with interests in northern Saskatchewan. As of writing this article, DML is trading at $1.62, down from its November 2021 high of $2.64. The company has strong financials and no debt.

NexGen Energy Stock (NXE)

This Vancouver-based uranium exploration company has a market cap of $2.82 billion. NXE shares are currently trading at $5.87, down over 38% from its high made in November. The company holds about 200,000 hectares of uranium-rich land in Saskatchewan and is well-funded to continue its expansion.

Sunworks, Inc. (NASDAQ: SUNW)

Trading at $2.11, the company has a market cap of $62.53 million USD. Back in January 2021, the price of the company’s stocks went as high as $23. The stock has been on the radar of hedge funds these past few months. US-based Sunworks offers solar solutions in residential, agricultural, and commercial areas.

Clean energy stocks with dividends

Renewable energy companies, such as the ones producing wind power or hydroelectricity, have been around for some time now. This means, clean energy stocks also provide stable and reliable cash flows, and as such are able to provide strong dividends. Let's take a look at those companies:

Brookfield Renewable Partners (BEP)

Headquartered in Toronto, Ontario, Brookfield Renewable operates over 6,000 energy generation facilities across North and South America, Europe, and Asia. This Brookfield Asset Management subsidiary has a market cap of $12.03 billion and offers a dividend yield of 3.74%. One of the largest global renewable energy platforms, Brookfield renewable, has more than 20 GW of electricity generation capacity.

NextEra Energy Partners (NYSE: NEP)

With a market cap of $5.96 billion, this Florida, US headquartered renewable energy business offers a dividend yield of 3.97% but expects to increase its dividend annually by 12% to 15% by 2024. The company owns several natural gas pipelines, while its parent company is the global leader in wind and sun power products with nearly 6 GW of those energy assets.

Polaris Infrastructure Stock (PIF)

This Ontario, Canada headquartered company has a market cap of $313.44 million. While smallest by market cap so far, it offers a juicy dividend yield of 4.71%. The company has a strong balance sheet, two operations projects, a hydroelectric facility in Peru and a geothermal facility in Nicaragua. Polaris focuses on acquiring and developing renewable energy assets.

*All numerical values as of February 14, 2022. Subject to change.

How to buy clean energy stocks in Canada

If you are interested in buying clean energy stocks, the best place to get started is with online brokers such as Wealthsimple and Questrade.

Wealthsimple Trade

Wealthsimple Trade is an online broker which offers unlimited $0 commission trades on its intuitive and user-friendly mobile app and desktop platforms. Apart from its low management fees, there is no minimum account balance required to get started, and on top of that, the company offers a $50 sign-up bonus to new eligible accounts. 

Questrade

Questrade has low trading fees and no annual fees for either registered or unregistered accounts. The commission fee charged by Questrade is also among the lowest in the industry, while the minimum balance requirement is $1,000. The platform further provides research, assessment, and monitoring tools to make informed decisions. New investors can now get $50 in free trades when they invest a minimum of $1000.

Are clean energy stocks a good investment?

The world is increasingly moving towards renewable forms of energy like wind, solar, hydro, geothermal, and others. With pressure on governments and corporations to respond to climate change and global warming, the demand for renewable energy sources is surging. Therefore, the renewable energy market too is showing substantial growth.

While energy stocks, especially clean energy stocks, are a good addition to your portfolio, always be aware of the risks, volatility of prices and uncertainty of the future. Also be mindful that the clean energy trend is still nascent, so do your research before investing to ensure that it matches your risk appetite and investment goals.

The Bottom Line

Countries around the globe are putting in more and more funds and resources into addressing the issue of climate control by shifting away from fossil fuels to renewable energy sources. Investing in clean energy stocks in Canada is a great way to take advantage of innovations in the energy sector, diversify your portfolio and feel good about your contribution to a future that is good for the planet and us.

Frequently Asked Questions

The green and clean energy revolution is happening now and it may grow faster than you think. So to profit from this trend, the best thing to do so is to invest in related stocks. But before investing, do thorough research on the company’s financials and future prospects. Also, make the company your are invested in is truly green and clean, especially if investing in ETFs or mutual funds through robo-advisors. This will ensure that you are not invested in options that are renewable only in name.

With the transition to clean energy still in its early stages, government policies and mandates regarding sustainable energy are still developing. Make sure you are clued into these developments before increasing the amount of risk in your portfolio.

Climate change has forced the energy sector to innovate and look towards more environmentally friendly sources of energy. It has made renewable energy stocks very attractive, but the best one currently trading on the TSX is the Ontario-based Algonquin Power & Utilities Corp (AQN)*.

Founded in 1988, the $12.02 billion market capitalization company is heavily invested in renewable energies and offers a dividend yield of 4.88*%. The company operates across multiple sectors in North America and has over 267,000 electrical connections and 369,000 gas connections.

*As of February 14, 2022

That entirely depends on the relative price of each stock. Research the stock to see if it is undervalued or overvalued and check details such as dividend yield, market cap and past performance to determine if you are paying the right price.

The renewable energy sector has been thriving for the past few years and is rapidly becoming an important industry in nations across the globe. The market acted very favorably for renewable energy stocks in 2021, and more gains may be in the offing.

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