Climate change is a pressing and growing concern globally. Governments are shifting increasingly from fossil fuels to carbon-neutral energy sources. On the domestic front, a Biden-led presidential administration is expected to be beneficial to green energy stocks. The industry is likely to gain momentum under the Green New Deal announced by the President-elect, with its goal of achieving net-zero carbon emissions by 2050.
Companies in this sector have already begun been capitalizing on this tailwind, as evidenced by First Trust NASDAQ Clean Energy Green Energy Index ETF’s (QCLN) 132% gain over the past six months.
High-dividend yielding stocks have gained popularity amid the coronavirus-pandemic-driven recession due to rising unemployment and economic stagnation. Increasingly, investors have been drawn to the stock markets seeing yield amid prevailing low interest rates. Companies such as NextEra Energy, Inc. (NEE), Albemarle Corporation (ALB), and Atlantica Sustainable Infrastructure PLC (AY) are not only operating in the burgeoning clean energy industry, they also pay decent dividends.
NextEra Energy, Inc. (NEE)
NEE is an electric power and energy infrastructure company in North America operating through two segments: FPL and NEER. FPL generates, transmits, and distributes electric energy, while the NEER segment produces electricity from clean and renewable sources.
Earlier this month, NEE announced its acquisition of eIQ Mobility, a software provider of mobility planning solutions. This provides NEE with a strategic entry point to the mobility market for fleet vehicle conversions.
NEE pays $1.40 in dividends annually, yielding 1.9% at its current stock price. It has a payout ratio of 61.2% of the net income. The company’s dividend payments have grown at a CAGR of 11.5% over the past five years.
NEE’s Net Income increased 39.8% year-over-year to $1.23 billion in the third quarter ended September 2020. Non-GAAP EPS rose 38.1% from the same period last year to $2.50.
The consensus EPS estimate of $2.29 for the current year indicates a 9.6% rise year-over-year. The company has an impressive earnings surprise history as well; it beat the Street EPS estimates in three of the trailing four quarters. The consensus revenue estimate of $5.55 billion for the current quarter ending December 31, 2020 represents a 20.9% rise year-over-year. NEE has gained 22.6% over the past year.
How does NEE stack up for the POWR Ratings?
B for Trade Grade
B Buy & Hold Grade
A for Peer Grade
B for Overall POWR Rating.
It is currently ranked #4 of 63 stocks in the Utilities – Domestic Industry.
Albemarle Corporation (ALB)
ALB is a specialty company, manufacturing, and marketing highly engineered chemicals. It operates through three segments: Lithium, Bromine Specialties, and Catalysts. ALB’s products have applications in energy storage, petroleum refining, consumer electronics, construction, automotive and pharmaceuticals.
Last month, ALB announced that it had become a founding member of Zero Emission Transportation Association (ZETA), a U.S.-based coalition that aims to eradicate fossil-fuel driven vehicles and replace them with EVs within the next 10 years. It is committed to achieving 100 percent electric vehicle (EV) sales by 2030.
ALB pays $1.54 in dividends annually, yielding 1.1% at its current share price. It has a payout ratio of 39.6% of the net income. The company’s dividend payments have grown at a CAGR of 6% over the past five years.
The consensus revenue estimate of $3.17 billion for the next year represents a 3.3% rise year-over-year. The company has an impressive earnings surprise history; it beat the Street EPS estimates in three of the trailing four quarters. The consensus EPS estimate of $4.09 for the next year represents a 3% rise year-over-year. The stock has gained 101.9% over the past year.
ALB is rated a “Strong Buy” in our POWR Ratings system. It has an “A” for Trade Grade and Buy & Hold Grade, and a “B” for Peer Grade and Industry Rank. In the 69-stock Chemicals Industry, it is ranked #6.
Atlantica Sustainable Infrastructure PLC (AY)
AY is a sustainable infrastructure company. It owns and manages renewable energy, natural gas, transmission and transportation infrastructure and water assets through its portfolio of approximately 25 assets.
AY entered an agreement with an Algonquin Power & Utilities Corporation’s (AQN) subsidiary, this month to acquire a 20-megawatt solar plant with a 15-year PPA in Colombia for $20 million. This move was made for strategic expansion purposes.
AY pays $1.68 in dividends annually, yielding 4.5% at its current stock price. It has a payout ratio of 142.1% of the net income.
AY’s revenues have increased 3.3% year-over-year to $302.99 million in the third quarter ended September 30, 2020. Its net Income has increased 103.7% from the same period last year to $89.38 million.
Analysts expect AY’s EPS to rise 22% to $0.22 for the current quarter ending December 31, 2020. The consensus revenue estimate of $5.39 billion for the current quarter represents a 9.8% improvement from the year-ago value. AY has gained 42.6% over the past year.
AY’s POWR Ratings reflect this promising outlook. It has an overall rating of “Strong Buy” with an “A” for Trade Grade, Peer Grade, and Buy & Hold Grade. Among the 63 stocks in the Utilities – Domestic industry, it is ranked #3.
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NEE shares were trading at $74.76 per share on Tuesday afternoon, up $0.36 (+0.48%). Year-to-date, NEE has gained 26.04%, versus a 15.74% rise in the benchmark S&P 500 index during the same period.
About the Author: Rishab Dugar
Rishab is a financial journalist and investment analyst. His investment approach is to focus on quality stocks, trading at low prices, with business models that he readily understands. More…
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