1 renewable energy share to buy now
Renewable energy stocks are the ultimate long-term investment. This is because the future of energy on this planet has only two possible options. Politicians around the world can accept climate science, according to which the vast majority of fossil fuels must remain untapped by 2050. The alternative is that we continue to extract fossil fuels until they become commercially available. not viable over the next decades.
Either way, it seems inevitable to me that renewable energy stocks will quickly rise in value. Since many are experimental, it also makes sense for me to purchase a FTSE 100 central.
The pillar of the FTSE 100
ESS (LSE: SSE) is my main store of renewable energy. With 9.1 million customers, the company is the UK’s second-largest energy supplier to the Big Six. At 1,650 pence, its share price is now close to the peak of 1,686 pence it reached just before the crash of March 2020. And since the start of the year, it has risen by more than 7%.
The company’s mission has been to develop renewable energies for years. And the pandemic has brought environmental concerns and oil supply chain issues back to the forefront. I think these two pressures put renewables higher on the SSE agenda.
It already generates around 4 GW of wind and hydro power and aims to triple the production of renewable energy between 2019 and 2030. Its long-term ambition is to reach zero net emissions by 2050. To support this objective, the company offers its customers the opportunity to upgrade to its Go green 100% renewable energy rate, for just an additional £ 3 per month.
In his recent first quarter trade statement, he outlined a £ 4.1bn investment plan “To feed communities to zero net”. And he plans to sell £ 2bn of assets that don’t fit SSE’s net zero strategy. She wants to use this capital to continue financing the world’s largest offshore wind farm at Dogger Bank. It also has one of the largest onshore wind farms in Europe at Viking in Shetland. And it already has the largest offshore wind development pipeline in the UK.
Splitting of renewable energy shares?
Elliott Investment Management of activist investor Paul Singer has just called for a split of SSE into its regulated electricity and renewable energy divisions. Having accumulated a large stake in the company, this strategy will come as no surprise to anyone who is watching the stock closely. Elliott has taken similar steps in the past. In 2019, he pushed EDP-Energias de Portugal SA to create a branch of renewable energy. And the share price in the new company has tripled over the past four years. An Elliott-backed SSE stock split could easily pay off for existing shareholders.
With a market cap of £ 17.2 billion, the FTSE 100 renewable energy share also pays a reliable 5% dividend, which it plans to maintain until at least 2023. And RBC Europe analyst John Musk believes that SSE is “Undervalued at current levels” but how are you “take some time before anything potentially materializes out of the situation.”
There are still risks. As it stands, SSE has its prices limited by OFGEM. As the regulator allows a price cap increase of £ 139 this year, SSE is likely to come under increasing regulatory pressure to justify any price hikes during the current economic turmoil. And it has high levels of debt to finance its current expenses. But it’s still a renewable energy stock that I would buy for my wallet right now.
Charles Archer has no position in any of the stocks mentioned. The Motley Fool UK has no position in any of the stocks mentioned. 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.