Sarah Travers
In the wake of global efforts to combat climate change, the world’s attention has turned to renewable energy. Trillions of dollars are slated for investment in building new renewable energy infrastructure over the coming decades. Despite this promising outlook, many renewable energy stocks have experienced significant losses in recent years, primarily due to rising interest rates.
Setting a Strategy in Motion to Counter Rate Impact
NextEra Energy Partners (NEP), a key player in the renewable energy sector, has seen a substantial decline in its stock value, losing approximately two-thirds of its peak value in 2022. The company is addressing this challenge by divesting its natural gas pipeline assets to pay off financing and fund new investments. It has also adjusted its dividend growth outlook to a sustainable rate of 5%-8% annually through 2026.
Highly Visible Growth with Brookfield Renewable
Brookfield Renewable (BEPC, BEP) has not been immune to the impact of rising interest rates, experiencing a nearly 50% loss in stock value. However, the company maintains a robust balance sheet, allowing it to continue its growth strategy without alteration. Brookfield expects to achieve double-digit growth in funds from operations (FFO) through 2028, supporting annual dividend growth of 5%-9%.
Funding and Growth Secured for Clearway Energy
Similarly, Clearway Energy (CWEN, CWEN.A) has faced a decline in stock value, dropping over 40% from its peak. Nonetheless, the company remains confident in its growth prospects, unfazed by higher interest rates. Clearway utilized proceeds from asset sales to acquire renewable energy assets, positioning itself for sustained dividend growth of 5%-8% annually through 2026.
Supercharged Total Return Potential
Despite the challenges posed by rising interest rates, NextEra Energy Partners, Brookfield Renewable, and Clearway Energy are poised for significant growth. As interest rates are expected to decline in the near future, these renewable energy companies could experience a resurgence in stock value and deliver substantial total returns to investors.
Embracing Renewable Energy’s Promising Future
The renewable energy sector stands at the forefront of the global transition to clean energy, fueled by trillions of dollars in investment. While rising interest rates have presented challenges for companies in this sector, NextEra Energy Partners, Brookfield Renewable, and Clearway Energy have taken proactive measures to mitigate the impact. With strategic initiatives in place and strong growth prospects, these companies are well-positioned to capitalize on the evolving renewable energy landscape and deliver supercharged total returns to investors in the years to come.
