2 shares of No-Brainer Energy to buy for $1,000 right now

The world is entering an unprecedented period. It is estimated that the economy will need to double its power generation capacity over the next 20 years to meet the growing demand for power from things like electric vehicles and data centers. At the same time, it will need to replace about half of its current capacity due to age and higher carbon emission profiles. This perspective suggests that the world will build a massive quantity of power generation capacity in the future, with renewables likely to lead.

Because of this, renewable energy stocks it looks like a no-brainer long-term investment right now. Brookfield Renewables (BEPC 2.37%) (BEP 1.22%) and Clearway Energy (CWEN 1.60%) (CWEN.A 1.54%)each trading around $30 a share, they’re two top options for those with about $1,000 to invest these days.

Strong growth ahead

Brookfield Renewable is a leading global producer of renewable energy. It operates utility-scale hydro, wind, solar and energy storage facilities in North and South America, Europe and Asia. It currently has an operating capacity of 34 gigawatts (GW), enough to power more than 25 million homes. It sells this power to utilities and large corporate buyers under long-term, fixed-rate power purchase agreements.

Those agreements provide Brookfield Renewable with stable cash flow. It pays out most of its steady income through dividends. Its dividend is currently over 4.5%. At this rate, could turn a $1,000 investment into an annual passive dividend income of over $45.

Brookfield Renewable expects to increase its already high-yielding dividend by 5% to 9% annually over the long term. Only its organic growth drivers (inflation driven rate increases, margin improvement activities and development projects) can fuel that plan (7% to 12% annually FFO growth per share until 2028). In addition, it is expected to continue to make acquisitions. This factor helps bolster Broofkfield’s view that it can deliver 10%+ FFO growth per share over that period.

The company has already lined up a staggering 230 GW of future renewable energy development projects, of which 65 GW are in advanced stages. It is expected to develop about 10 GW of projects annually over the next few years.

Meanwhile, it is in process of strengthening its already robust growth prospects by acquiring a leading European renewable energy company Neocene. Brookfield and its partners have agreed to acquire a majority interest in the company and plan to buy out its remaining shareholders after the initial transaction closes. Neoen has 8 GW of projects in operation and under construction and another 20 GW in the late-stage development pipeline. Brookfield and its partners have also recently strengthened their leading renewable energy operations in India and made their first investment in Korea.

A clear path to grow

Clearway Energy is one of the leading producers of clean energy in the US. It has 9 GW of renewable energy and an environmentally friendly natural gas power generation capacity. These assets generate predictable cash flow, which Clearway uses to pay an attractive dividend (currently yielding 5.5%).

The clean energy company expects to grow that payout toward the upper end of its annual target range of 5% to 8% by 2026. capital recycling strategy. It cashed in on its thermal assets a few years ago and is reinvested revenues from investments with higher returns in renewable energy.

Clearway Energy empowers renewable energy developers to build more capacity by acquiring operational projects. This allows them to recycle that capital into new developments. It has committed to or offered to buy several renewable energy projects that should enter commercial service in the next two years. This gives it a lot of visibility into its ability to grow its cash flow per share.

Meanwhile, the company has already started to recontract its natural gas capacity. The rates are entering large enough that this catalyst alone could support dividend growth towards the lower end of its target range in 2027. Additionally, the company has the financial ability to continue acquiring renewable energy projects from developers in the future to continue to- and push higher payouts. Given the huge need for renewable energy, Clearway should have plenty of opportunities to continue expanding its portfolio in the future.

Strong total return potential

The world will need much more renewable energy in the future. This is found in the strategies of Brookfield Renewable and Clearway Energy. It should be able to continue to grow its earnings at robust rates, which should allow to increase its dividends at a healthy rate. This combination should give them the power to produce totally strong returns, making them look like unexpected purchases right now.