Oil stocks have generated handsome returns for millions of investors over the decades. For example, from 2001 to 2010, the ETF Energy Select Sector SPDR (NYSEMKT: XLE) generated a total return of 141% compared to the S&P 500 Indexa total yield of 15%. However, the performance of the energy sector has not been so impressive over the past decade. Between 2011 and 2020, the Energy ETF generated a negative total return of -23%, significantly underperforming the return of the S&P 500 Index by 267%. Overall, over the two-decade period, oil stocks have underperformed the overall market.

While oil stocks still offer decent growth prospects, they may not replicate the types of returns they have generated in the past, in part due to the challenges created by oil price volatility and increasing usage. renewable energies. It would therefore be prudent to look for energy stocks that have the potential to outperform oil stocks and the market in general. Let’s take a look at three of these stocks.

Brookfield Renewable Energy Partners

If you’ve invested in oil stocks primarily for dividend income, luckily there are dividend payout opportunities in the renewable energy arena as well. Brookfield Renewable Energy Partners (NYSE: BEP) (NYSE: BEPC) offers a dividend yield of just over 3%. With a generation capacity of 21,000 megawatts, Brookfield Renewable is one of the world’s leading renewable energy companies. In addition, it has around 31,000 megawatts of capacity under development.

From 2000 to 2020, Brookfield Renewable increased its distribution at a compound annual rate of 6%. Over the long term, the company aims to generate total returns of 12-15% for its shareholders, including payout increases.

Brookfield Renewable achieved 5% year-over-year growth in its operating funds in the last quarter. It also continues to commit funds to growth projects and has invested or made deals to invest around $ 1.9 billion in a range of projects during the first half of this year. Overall, there is a lot to like about Brookfield Renewable Partners.

Atlantica sustainable infrastructure

Atlantica sustainable infrastructure (NASDAQ: AY) the stock is trading at a dividend yield of almost 4.5% at the time of this writing. The company generates more than 70% of its turnover from renewable energy production, with an emphasis on solar energy.

Image source: Getty Images.

Atlantica Sustainable generates most of its income from long-term contracted assets. As an indication, the average residual contractual life of its assets is 16 years. Such contracts provide relative stability to the cash flow of the business.

Atlantica aims to increase its cash available for distribution from 5% to 8% through 2024 and plans to invest $ 300 million annually in medium-term growth projects.

Atlantica Sustainable posted a strong performance in the second quarter, with revenue growth of 47% year-over-year. In the first half of this year, the company increased its cash available for distribution by 12.9% compared to the same period in 2020. Overall, Atlantica Sustainable stock appears well positioned to continue to benefit from growth expected from renewable energies.

Enphase Energy

Microinverter supplier Enphase Energy (NASDAQ: ENPH) is a growing company with good prospects. Enphase Energy reported 152% year-over-year revenue growth in the second quarter. At the same time, it reported an impressive gross margin of 40.4% for the quarter.

Enphase Energy recently increased its revenue at a faster rate than its rival SolarEdge Technologies.

ENPH Revenue (Quarterly YoY Growth) data by YCharts.

In addition, the company generates a higher gross margin than SolarEdge. Over the past five years, Enphase Energy’s quarterly revenue growth has averaged 36%. For the third quarter, Enphase expects revenue of between $ 335 million and $ 355 million. At mid-term, this guidance range implies growth of 94% over the third quarter of 2020. It also anticipates a high gross margin of between 37% and 40% for the quarter.

In addition to microinverters, Enphase also benefits from sales of energy storage batteries. As the use of solar energy increases, demand for Enphase Energy’s products is expected to continue to grow. In short, Enphase Energy stock offers more attractive growth prospects than any oil stock today.