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Investing in green energy seems like a good idea. The world is turning green and companies that are already well established in this market would benefit from this transition. But before you jump on this logical investment train, there are some limits of green energy that you need to keep in mind and why the world might not be able to get out of fossils completely as soon as you think. .
This will help you get an idea of ââwhat to invest in in the near future.
The case of green energy
Green energy is not the ideal source of energy from an environmental point of view alone. Rather, it is a smart forum to transfer to because they are ârenewableâ. The world is unlikely to run out of sun, wind, and even hydroelectricity anytime soon, as fossil fuels will run out in the future.
But it’s a good idea to keep the limits on green power, for now, especially wind and solar power. Even if we can capturing the power that these renewable energies have to offer, we have no control over them. The recent UK electricity supply and demand conundrum has indicated what a simple change in climate regime can do to a purely renewable energy source.
Whatever the challenges, the era of renewable energy is coming and sooner or later companies like Algonquin Power & Utilities (TSX: AQN) (NYSE: AQN) will take full advantage of the investments they have made in renewable energy. And the profits will also flow to Algonquin investors in the form of capital gains and dividends.
Unlike some renewable energy-based companies that are just promises, Algonquin is a powerful investment now from the perspective of value investors. It trades at an almost fair valuation and offers a healthy return of 3.8%. The company also has decent capital appreciation potential as evidenced by its 10-year compound annual growth rate (CAGR) of 17.3%. The utility industry is stable enough and you might consider buying Algonquin and holding it during a time when green power dominates the grids.
The case of uranium
Uranium, as a clean but dangerous source of fuel, is expected to fill many of the gaps inherent in green energy. Since it relies on a storable fuel source, energy production can be considerably more predictable and reliable. But nuclear power plants are difficult and time consuming to erect.
However, if more countries start commissioning nuclear power plants and building up their reserves, the price of the metal will rise and companies like the Saskatoon-based company Cameco (TSX: CCO) (NYSE: CCJ) could continue to grow. The shares of the world’s largest publicly traded uranium company have already risen more than 170% in the past 12 months.
It also pays dividends, but the yield is quite low (0.23%). One reason to consider this uranium stock if the underlying asset experiences a significant increase in demand is that it could offer more consistent (albeit rhythmic) upward growth than smaller uranium companies. .
Take away food
Green energy and uranium are both good assets to own, even if you don’t just buy them from a ESG investments perspective. Uranium is likely to yield faster and faster, while green energy may take time to realize its full potential. In either case, choosing the right company to invest in is just as crucial as the right market dynamics.