Summary: Investing in renewable energy dividend stocks offers a double benefit: supporting sustainable energy initiatives while earning steady returns. In this guide, we’re looking into our top 3 picks for 2024 that are all available for purchase on our go-to online broker, eToro.
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What are renewable energy dividend stocks?
Renewable energy dividend stocks represent shares in companies that generate electricity from renewable sources such as wind, solar, hydro, and geothermal energy. These companies distribute a portion of their profits to shareholders in the form of dividends, making them an attractive option for income-oriented investors. Additionally, investing in renewable energy dividend stocks aligns with sustainability goals, contributing to the fight against climate change.
3 best renewable energy dividend stocks
After conducting thorough research, we’ve come up with our top 3 renewable energy dividend stock picks, including:
- Clearway Energy (NYSE: CWEN);
- NextEra Energy Partners (NYSE: NEP);
- Atlantica Sustainable Infrastructure (NASDAQ: AY).
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Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.
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Clearway Energy (CWEN)
Clearway Energy stands out as a leading player in renewable energy generation and distribution. With a diverse portfolio comprising wind, solar, and natural gas assets across the United States, Clearway offers stability and growth potential. The company’s commitment to expanding its renewable energy capacity while maintaining attractive dividend payouts makes it an appealing choice for investors seeking both income and capital appreciation.
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NextEra Energy Partners (NEP)
NextEra Energy Partners is among the largest renewable energy companies globally. Focused on wind and solar energy projects, NEP boasts a robust pipeline of assets poised for future growth. Investors are drawn to NEP’s strong track record of dividend growth, supported by stable cash flows from long-term power purchase agreements. With a strategic vision centered on sustainability, NextEra Energy Partners offers compelling opportunities for income-oriented investors.
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Atlantica Sustainable Infrastructure (AY)
Atlantica Sustainable Infrastructure operates a diverse portfolio of renewable energy and water infrastructure assets across North and South America, Europe, and Africa. Specializing in solar and wind energy projects, AY provides investors with exposure to geographically diversified revenue streams. Moreover, the company’s focus on long-term contracts and stable cash flows underpins its ability to deliver consistent dividend payments.
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Where to buy renewable energy dividend stocks?
When it comes to buying and selling stocks, choosing the right platform is crucial. As such, our chosen broker is eToro, a user-friendly and popular online trading platform that allows investors to access a wide range of stocks, including renewable energy dividend stocks like CWEN, NEP, and AY. It also offers a range of useful features, such as:
- Commission-free stock trading;
- Access to over 2,000 stocks from 17 different exchanges;
- The option to purchase fractional shares;
- Charting tools;
- A user-friendly platform that simplifies the trading experience.
Highly Rated Stock Trading & Investing Platform
-
Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.
-
0% commission on buying stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.
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Copy top-performing traders in real time, automatically.
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eToro USA is registered with FINRA for securities trading.
For those interested in dividend investing, feel free to check out our other guides, including:
- 3 Best Undervalued Dividend Stocks;
- 3 Best Energy Dividend Stocks;
- 3 Small Cap Dividend Stocks;
- 3 Warren Buffett Dividend Stocks;
- 3 Best UK Dividend Stocks;
- 3 Oil Dividend Stocks;
- 3 Best Dividend Stocks.
Pros and cons of buying oil dividend stocks
Pros
- Steady income: Dividend stocks provide a regular stream of income, making them attractive for income-oriented investors;
- Potential for growth: Many dividend-paying companies also offer opportunities for capital appreciation, providing investors with a dual benefit;
- Historical stability: Dividend-paying stocks have historically exhibited more stable performance during market downturns compared to non-dividend-paying stocks;
- Inflation hedge: Dividend payments often increase over time, helping investors hedge against inflation and preserve purchasing power.
Cons
- Limited growth potential: Some dividend-paying companies may prioritize dividend payments over reinvesting profits into growth initiatives, potentially limiting long-term growth prospects;
- Interest rate sensitivity: Dividend stocks may become less attractive relative to fixed-income investments when interest rates rise, impacting their valuation;
- Dividend cuts: Companies may reduce or suspend dividend payments during periods of financial distress, leading to a loss of income for investors;
- Tax implications: Dividend income is typically subject to taxation, potentially reducing overall returns for investors, especially in higher tax brackets.
Common investing mistakes when buying dividend stocks
Investors may fall into the trap of solely focusing on high dividend yields without considering the underlying fundamentals of the company, which is one of the most common investing mistakes when buying dividend stocks. The thing is—high yields could be a warning sign of an unsustainable dividend or deteriorating financial health. Still, this isn’t the only pitfall that you can come up against. You should also be wary of:
- Ignoring dividend sustainability: It’s essential to assess the sustainability of a company’s dividend payments by analyzing factors such as cash flow, earnings stability, and payout ratio. Investing in companies with consistently growing dividends and a history of prudent capital allocation is crucial for long-term success;
- Neglecting diversification: Concentrating investments in a few dividend-paying stocks or sectors increases portfolio risk. Diversification across different industries and asset classes can help mitigate risks and enhance overall portfolio stability;
- Overlooking growth potential: While dividend income is attractive, investors shouldn’t overlook companies with significant growth potential. Balancing dividend-paying stocks with growth-oriented investments can optimize portfolio returns over the long term;
- Failing to reevaluate investments: Market conditions and company fundamentals evolve over time. Investors should regularly review their dividend stocks’ performance and adjust their portfolios accordingly to ensure alignment with their financial goals and risk tolerance.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about investing in the best renewable energy dividend stocks
What energy stocks pay the highest dividend?
ExxonMobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), and ConocoPhillips (NYSE:COP) are among the energy stocks known for paying some of the highest dividends.
Which stock is best for renewable energy?
Determining the best renewable energy stock depends on factors such as investment goals and market conditions. Notable options include Clearway Energy (NYSE: CWEN), NextEra Energy (NYSE: NEP), and Atlantica Sustainable Infrastructure (NYSE: AY), known for their extensive renewable energy portfolios and strong financial performance.
Which solar stocks pay dividends?
Solar energy stocks that pay dividends include Clearway Energy (NYSE: CWEN), Atlantica Sustainable Infrastructure (NASDAQ: AY), and NextEra Energy (NYSE: NEP).
Are renewable energy dividend stocks a safe investment?
While renewable energy dividend stocks offer income potential, investors should conduct thorough due diligence to assess the financial health and sustainability of dividend payments.
How often are dividends paid for renewable energy stocks?
Dividend payment frequency varies among companies, but they typically occur quarterly or semi-annually.
Can I reinvest dividends from renewable energy stocks?
Many companies offer dividend reinvestment plans (DRIPs), allowing investors to automatically reinvest dividends to purchase additional shares without incurring transaction fees.
What factors should I consider when evaluating renewable energy dividend stocks?
Key factors to consider include the company’s financial performance, dividend sustainability, growth prospects, competitive positioning within the renewable energy sector, and regulatory environment.
Highly Rated Stock Trading & Investing Platform
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Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.
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0% commission on buying stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.
-
Copy top-performing traders in real time, automatically.
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eToro USA is registered with FINRA for securities trading.
