With demand for green energy set to explode over the next few years, I am looking for renewable energy stocks to buy for my portfolio in order to capitalize on this trend. Here are two companies that I would buy for my wallet right now.

Shares to buy

The number of renewable energy stocks in the UK is relatively small. Therefore, I looked abroad for other options. One of the best companies I have found is NextEra Energy (NYSE: NEE).

Since May 2021, NextEra has been the world’s largest producer of wind and solar energy. It’s much bigger than anything we have here in the UK and has substantial economies of scale thanks to its giant renewable energy projects across the US to Canada.

Considering the size, scale and reputation of the company, it looks like it will be a significant player in the renewable energy industry for the foreseeable future. This is why I believe this is one of the best stocks to buy in the industry today. It could also benefit from Joe Biden’s $ 2.3 billion infrastructure plan and the president’s pledge to halve U.S. greenhouse gas emissions by 2030.

In addition to the group’s growth potential, the title also offers a dividend yield of 2.1%.

However, this company might not be suitable for all investors. Its North American orientation means that its success depends heavily on what happens on the other side of the pond. Some investors might find it difficult to interpret the laws and developments taking place in the United States, which could have a significant impact on NextEra’s business.

Despite this risk, I would buy the company for my portfolio of renewable energy stocks today.

Renewable energy stocks

Back in UK I would buy too Greencoat UK Wind (LSE: UKW). Simply put, I think this is one of the best stocks to buy in the green energy space. This is due to its exposure to wind power, its extensive portfolio, its experienced management team and its dividend yield. Indeed, at the time of writing, the stock offers a 5.7% dividend yield.

This payment to shareholders is funded by income from its portfolio of wind farm projects in the United Kingdom. The majority of the company’s revenue is generated through power purchase agreements. These are not fixed price agreements, so the company is exposed to electricity prices in the UK.

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The structure has its advantages and disadvantages. On the one hand, the company will realize higher profits if electricity prices rise. On the other hand, if prices collapse, due to oversupply, profits will fall. This could be particularly troublesome for Greencoat, given the company’s high level of debt. If profits drop significantly, the business may have difficulty paying its debts.

Nonetheless, I think this is one of the best renewable energy stocks to buy today for the reasons outlined above. That’s why I would buy Greencoat now.

Renewable energy stocks to buy after 2 appeared first on The Motley Fool UK.

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Rupert Hargreaves has no actions mentioned. The Motley Fool UK recommended Greencoat UK Wind. The opinions expressed on the companies mentioned in this article are those of the author and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that considering a wide range of ideas makes us better investors.

Motley Fool United Kingdom 2021