Thought I was going to write a quick post about our latest purchase. The market continues to be in a tear and things seem to change with the way we make our daily lives. Obviously linked to Covid, but one thing is clear. The world wants and needs more renewable energy.
I said it before oil and gas will be here for a while, but politically, writing is one of the walls. The talk is climate change and a step towards more and more renewable energies. Companies are now getting their ESG ratings and an easy way to improve them is to move to green energy.
When I think of a sector that’s really booming over the next 10 years, renewable energy is probably high on the list. Of course there is technology, ev and automation too, but I can see governments really pushing for greener energy. I am sure we will see new grants and tax savings for electric vehicles and more solar panels etc. etc.
As most of you already know, we have solar panels on our roof. It feels great to be green and collect those paychecks from Hydro One. Personally, I think all new builds should be forced to install panels on it. Now I know people are going to be arguing about the extra cost, but the cash flow is great and it really pays off and helps with the mortgage payments. We keep cutting forests and building as many houses as possible in these sub-areas. Why not try to go green? A few trees on each lot doesn’t really make much compared to the dense forest that used to be there.
I really believe that we need to change our behavior in the future, and I think we have done this with more and more green roofs and alternative energy sources. As more people install panels, the cost will go down and there will be more advances in this area.
If you want to start going green but don’t have the capital to install a system, an easy option is to invest in renewable energy companies. Personally, we own Brookfield Renewable and Algonquin Power in this area. Enbridge and Tc Energy both have renewables in their portfolio and are expanding their portfolios, but their main business is pipelines.
Growth / income / increasing dividend
You have a guy on the 2nd base, a guy on the first, and a big bat on your plate. 0 outs. A fastball comes directly onto the plate and the batsman grounds the ball directly to the 3rd baseman, he marks the 3rd, throws the 2nd, throws the first. A triple game. Very nice!
This is what you get with these renewable energy companies. A triple play. Brookfield Renewable and Algonquin Power were some of our top performing stocks. (plus 240% on bep and 60% on aqn) Both pay a large dividend and every year those dividends increase. That’s what it’s all about. I see some people saying utilities are boring and only for income, but they weren’t. You also get a real appreciation in the share price.
Of course, in an environment of increasing interest, things can change. But since the demand for green energy is so high, I wouldn’t bet against it. I’ll say, while some renewable energy companies like Brookfield Renewable have grown a little fast, I don’t think they’re a bargain at the moment (although they’ve pulled back a bit lately).
Algonquin Power stands out, however, it hasn’t had the same kind of run and at under $ 20 a share (Canadian) I think it’s a great buy. According to Yahoo Finance, the P / E is only 11.68. You will also get an initial dividend yield of 3.93% which will most likely increase this month. They have a 5 year dividend growth rate of 10.01% and I could see that they were up 7-10% in May. They have increased their dividend for the past 11 years in a row.
They also offer a 5% drop off discount which is absolutely fantastic!
Source – Algonquin Company Information
I think this picture from their investor relations page speaks volumes. Lots of growth in the pipeline that will keep increasing the share price and dividend!
Last week we added 61 more stocks at $ 19.83 per share, perhaps a little earlier than it’s cheaper today. But it’s a long-term game so I don’t think I will mind in 10 years. This purchase adds $ 39.70 to our forward dividend income and hopefully increases the quarterly dividend enough to drain another share. This is what the accumulation phase is all about!
Utilities has become one of our highest sectors in the portfolio and I always hesitate to add to the higher sectors, but if the stock price continues to decline we will definitely keep buying more Algonquin and Brookfield if the price is right. In my opinion, the demand for renewable energies will only continue to grow.
Well there is our last purchase. With this one we have now bought all 3 companies that I said we would buy more of in 2021. Lmt has had a great run since our purchase, but right now my leeway is to make it our next purchase as well, but everything else can change.
What did you buy or see?
Hey, I’m Rob, the creator of Passive Canadian Income.
In 2011, my wife and I had nearly $ 60,000 in debt and $ 7,000 in negative net worth. We paid for it all through hard work and financial education. Now we are focusing on increasing our passive income streams to make the money work for us. Follow the journey by clicking the social media links below or signing up to be notified of new posts in the sidebar.