Renewable Stocks Can Generate Retirement Income

Renewable investment options are often referred to in terms of how good they are with respect to the environment. This is particularly true when compared to traditional fossil fuel-burning facilities. But what about your portfolio? Some renewable investments are stellar options to help generate retirement income.

Here are several options to consider adding to your portfolio today.

Strong growth, great dividends, and an all-renewable portfolio?

Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) is a unique investment that should be on the radar of all investors. The company operates an all-renewable portfolio of facilities and continues to expand aggressively. Across both current and under-construction facilities, the company boasts a capacity of four gigawatts (GW).

In terms of growth, Algonquin recently closed acquisitions or began operation on several key facilities. This includes the Maverick Creek Wind facility in Texas (492 MW), the Altavista Solar form in Virginia (80 MW), and the Wet Raymond Wind facility in Texas (240 MW).

If that weren’t enough, the company has earmarked upwards of US$9.4 billion over the next several years towards further growth.

Turning to dividends, Algonquin offers a quarterly dividend that carries an appetizing yield of 4.34%. Algonquin has also provided investors with annual bumps to that dividend for years. That factor alone makes Algonquin a great renewable investment option to generate retirement income.

In terms of results, Algonquin reported results on the second fiscal quarter earlier this month. In that quarter, Algonquin saw revenues surge 54% to US$527.5 million over the same period last year. On an adjusted basis, Algonquin earned US$91.7 million, reflecting an incredible 93% bump over the same period last year.

Here’s another well-diversified pick to consider

TransAlta Renewables (TSX:RNW) is another worthy renewable stock to consider. Like Algonquin, TransAlta’s potential to generate retirement income is great. TransAlta provides investors with a monthly distribution, which works out to a respectable 4.75%.

In terms of the potential to generate retirement income, a $30,000 investment in TransAlta will yield just shy of $119 each month. That potential grows further when factoring in growth, dividend reinvestments, and potential future dividend hikes.

If that weren’t enough, TransAlta is also a well-diversified and defensive renewable energy pick. The company boasts a portfolio of facilities across Canada, the U.S., and Australia. Those facilities are also diversified across different technologies, including wind, solar, hydro, and natural gas.

In short, TransAlta is a great renewable energy stock to generate retirement income that also has growth potential.

Some final thoughts

There’s one more key factor that applies to both TransAlta and Algonquin that is worth mentioning. Renewable energy facilities are growing in demand. In short, traditional fossil fuel-burning utilities are burdened with staggering transition costs that renewable stocks simply don’t have.

Instead, renewable stocks like TransAlta and Algonquin can (and are) investing heavily into growth. This will provide prospective investors with years of income and growth potential.

In other words, buy them now and hold them forever.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Demetris Afxentiou owns shares of Algonquin Power & Utilities Corp. The Motley Fool has no position in any of the stocks mentioned.

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