It is time we understand the importance of climate change and contribute the best we can towards a cleaner and greener future. As the world moves towards reducing the damage done in the past, we will see soaring demand for companies that are operating in the renewable energy sector. It might take a few years for us to achieve our climate change goals, but we will see a lot of companies benefitting from it. Now is the time for smart investors to consider green dividend growth stocks for their portfolios.
As per International Energy Agency’s Electricity Market Report 2023, renewables will dominate the growth of the electricity supply of the world over the next three years. So, while you are looking for high-growth green energy stocks, it wouldn’t hurt to watch out for the green dividend aristocrats. Besides capital appreciation, you will also be able to enjoy a steady passive income. Let’s take a look at the best green dividend stocks to add to your portfolio for a greener and more profitable future.
Best green dividend stocks: NextEra Energy (NEE)
One of the best green dividend stocks, I’ve already recommended NextEra Energy (NYSE:NEE) several times in the past. The company has committed to Real Zero, which aims to eliminate emissions from its operations by 2045, and this is a major step forward in the green energy industry. To achieve this goal, it has created the Zero Carbon Blueprint, which has laid out plans to increase the deployment of renewable energy and help the U.S. economy with its decarbonization efforts. NEE stock is trading at $75 today and is up over 6% in the past year.
NextEra recently reported quarterly earnings and beat expectations. It reported an EPS of $0.84, and the earnings stood at $1,678 million. The company’s utility business, Florida Power and Light, is steadily growing and will continue to contribute to the total revenue. Its first-quarter income stood at $1,070 million, and the company now has 5.8 million customer accounts.
Interestingly, the company has a 4,600 MW of solar portfolio, which is the largest solar portfolio of any utility company in the U.S. NextEra Energy plans to double the solar capacity additions this year and expects an annual growth rate between 6 to 8% of the 2024 EPS expectations range.
One solid reason to bet on this stock is the dividend yield of 2.48%, and the company plans to increase the dividend by 10% a year through 2024. NextEra Energy has paid and increased dividends since 2006 consistently, and it recently declared a dividend of $0.4675. If you think the future is green energy, NEE stock is the one to own for long-term gains.
Enbridge (ENB)
Enbridge (NYSE:ENB) has a dividend yield of 6.6% which can be an ideal addition to your portfolio amid fears of a looming recession. The North American company is reliant on the cash flow from oil pipelines, and it is taking strong steps to move towards greener alternatives. Trading at $39 today, there are several reasons why Enbridge is one of the best green energy dividend stocks to buy now.
Enbridge has the second-largest natural gas pipeline in the U.S. and a solid renewable power generation business. The company recently reported impressive first-quarter results. It produced $3.87 billion in operating cash flow and benefited from the growing volume of the oil pipeline system.
Enbridge has made several investments that will continue to generate revenue for it in the coming years. It has invested in 16 solar energy projects, 23 wind farms, one power transmission project, one geothermal project, and five waste heat recovery plants. There is no stopping the momentum of this company, and considering the long-term potential; the stock looks undervalued to me.
That said, it recently agreed to acquire a natural gas storage facility in British Columbia, Aitken Creek Storage, for $400 million. The company will acquire the 93.8% stake of FortisBC Holdings in the facility. This deal will play a crucial role in helping the company with Canada’s liquefied natural gas (LNG) export facilities.
The management has been paying dividends for the past 28 years and has boosted the quarterly dividend to $0.67. It announced the EBITDA guidance between $15.9 billion to $16.5 billion for this year, and I believe the company will be able to beat expectations yet again. ENB is a solid passive income stock to own.
Brookfield Renewable (BEPC)
Next on my list of the best green dividend stocks is Brookfield Renewable (NYSE:BEPC), with a dividend yield of 4.36%. Besides wind and solar power, the company also has a presence in hydroelectric power. The company recently announced quarterly results, and its revenue was up $195.00 million from the same period last year. Its hydroelectric segment contributed the maximum towards revenue, followed by the wind and solar segment. The company has declared a dividend of $0.3375 and aims to increase the dividend by 5% to 9% annually on average, which makes it one of the top green dividend stocks for sustainable income. It has enough liquidity to continue rewarding shareholders in the coming years.
BEPC stock is trading at $35 and is up after the solid quarterly results. The stock soared 8% after the company announced positive results. It is up more than 24% year to date and is inching closer to the 52-week high of $42. The company has gained momentum after the announcement of acquiring Origin Energy for $10.2 billion. This deal will help the company lead a massive decarbonization effort in Australia and will help with long-term growth prospects. This is one solid dividend stock to buy and hold as the company is on its path toward massive growth.
JP Morgan analyst Mark Strouse has a price target of $49 with an Overweight rating on the stock. The analyst believes that the Inflation Reduction Act is a major policy change in U.S. history to help growth in the transition towards renewables.
On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.