Are you looking to invest in energy stocks? You can buy energy stocks in a taxable brokerage account or in a tax-advantaged retirement account, such as an individual retirement account (IRA). If you don't have one of these accounts yet or aren't satisfied with your current broker, check out Forbes Advisor's list of the best online brokerages. Investing in energy stocks can be a great way to diversify your portfolio and benefit from the growth of the renewable energy sector. Climate change and socially responsible investment are the main catalysts of the clean energy revolution.
Many people have personal or ethical reasons to invest in renewable energy, but the opportunity to help the planet isn't the only potential benefit of including renewable energy in your portfolio. Investing in alternative energy can help diversify your assets. When oil and other traditional energy resources experience volatility, renewable investments can act as a stabilizing force. If you want your investment portfolio to participate in the green revolution, you can start by investing in renewable energy stocks.
There are many options available, from large companies like NextEra Energy and Brookfield Renewable Partners to smaller companies like Clearway Energy and First Solar. Each company has its own unique business model and potential for growth, so it's important to do your research before investing. You can also invest in exchange-traded funds (ETFs) or mutual funds that focus on the energy sector. These funds are like baskets of stocks: you invest in one fund and you're exposed to many companies at once.
However, if you invest in individual stocks or even in sectoral funds, it is vital that you analyze the business and understand how you are going to make money in the future and not invest in the rearview mirror. NextEra Energy is one of the world's largest producers of wind and solar energy. It generates energy in its Florida utility companies and in its energy resources segment, which sells energy under PPA to other utility companies and users. Brookfield expects even greater growth in the future (up to 20% per year until 2026), driven by its extensive portfolio of renewable energy development projects and additional acquisitions.
The projects should allow the company to increase its dividends by between 5% and 9% per year, which would make it one of the best dividend stocks in renewable energy. It expects to maintain a top-notch balance sheet, which will give it the financial flexibility it needs to continue expanding. Clearway Energy is one of the largest owners of renewable energy generating facilities in the U. S. UU.
It complements its wind and solar energy portfolio with highly efficient installations powered by natural gas. Clearway also sells its energy through PPAs that generate a constant cash flow for the company. First Solar develops and manufactures thin-film solar panels that use their larger size to generate more energy than competing technologies, making them ideal for utility-scale solar energy projects. Phillips 66 also intends to increase its adjusted EBITDA through its participation in DCP Midstream (opens in a new tab), which is dedicated to the business of collecting, processing, transporting, storing and marketing natural gas. In January, Phillips increased its economic participation in this company to 86.8%.
DCP Midstream is a principal limited company between PSX and Enbridge. It predicts that profits will increase in or close to its annual target range of 6 to 8% at least until 2025, driven by continued investments in renewable energy. If you want to explore similar stocks, you can also take a look at the 5 best energy stocks to invest in, according to analysts. According to independent research firm Morningstar, the number of index mutual funds and sustainable exchange-traded funds has more than doubled in recent years, as has the money invested in them, giving sustainable investors more options as to where to invest. For those who have the time and the will, investing in individual stocks can be rewarding, but it's important to understand that energy stocks are some of the most volatile and the most prone to bankruptcy. And sometimes energy companies attract one or two renowned investors, such as the legendary Warren Buffett, who has been buying shares in Occidental Petroleum in the recent past. The investment information provided here is for general informational and educational purposes only and should not be interpreted as financial or investment advice. In addition, investors are informed that the performance of previous investment products does not guarantee future price appreciation.