Investing With A Climate Change Focus - Part 2

This is my second part of my Investing With A Climate Change Focus.  You can read the first part, by clicking here.

In recent years, we have seen more and more extreme weather events occurring around the globe.  

In fact, in recent months we have seen some extreme weather events such as the atmospheric rivers that occurred in the province of British Columbia and the north western United States.  The Nooksack River in Washington State breached its banks.  When this happens, the overflow flows North into British Columbia. This flooded the area known as the Sumas Prairie which is located in the Abbotsford area of British Columbia

The atmospheric rivers caused large amount of rain to fall in a very short time.  British Columbia dealt with large amounts of wildfires and a heat dome even during this past summer.  The former event caused the latter event to be more destructive according to scientists.  The atmospheric rivers caused damage to several major highways including the main highway that connects the Vancouver area with the rest of Canada.  The main highway is the Coquihalla highway, which is still closed until at least January 2022.

As of the time of this writing, highway 3 has been fixed and his open to commercial traffic only.  This highway is mostly single lane in either direction with a lots of twists and turns and hills.

The port of Vancouver was effected from these atmospheric weather events due damage to the rail lines servicing the port.  The rails have  resumed operation.

I could mention more extreme weather events, but we constantly hear about them on a monthly basis in the news.

Investment #1   New Flyer Group

(Source: nfigroup.com)

Public transportation will play a more important role going forward.  As governments around the world implement a carbon tax, the cost of things will increase.  This will include driving a vehicle, heating your home, and the food you eat.   A way to reduce the amount of carbon tax you pay is to use public transportation which includes buses, light rail trains or subways.

New Flyer Group is mostly known as a manufacture of buses.  New Flyer Group consists of 13 subsidiaries.  NFI's CEO and President said, "NFI has successfully transitioned from a vehicle manufacturer to an electric mobility solutions provider, with an offering that includes zero-emission buses and coaches, charging infrastructure, telematics, and parts and service."

New Flyer buses are currently used in 13 countries.  Within these 13 countries,  the buses are currently used in 80+ countries or on order.  New Flyer Group have delivered 1701 zero-emission buses since 2015.  

New Flyer Group trades on the Toronto Stock Exchange under the ticker symbol NFI. The stock has fallen from its 52 week high due supply chain issues that are affecting global shipping.  

Ticker Symbol :    NFI.TO

Dividend:             $0.2125 quarterly

Closing Price:       $19.09  (as of December 16)

Yield:                   4.45%   

The stock is currently yielding 4.45%, which is 41 bps above the stocks own 5 year average yield.  

(Source: nfigroup.com)

Investment # 2   Algonquin Power and Utilities

Algonquin Power and Utilities consists of 2 divisions.  The two divisions are Regulated Services Group and Renewable Energy Group.  

Click To Enlarge

Regulated Services Group provided rate regulated water, electric, and gas utilities to over one million connected customers in communities across Canada and the United States.  These utility services consist of electricity distribution, natural gas distribution, water distribution, and wastewater treatment.

The Renewable Energy Group generates and markets electrical energy produced by its large portfolio of renewable power facilities.  The facilities are located in both Canada and the United States.  The renewable energy is generated via solar, thermal, hydroelectrical and wind.

As of September 30, 2021, Algonquin Power and Utilities gas over 4 GW of Renewables in operations or under construction.

As per the 2020 annual report, renewable power generation made up 55% of their power generation.  The company's goal is to have 75%  of renewable power generation by 2023.

Ticker Symbol:          AQN.TO

Dividend:                  $0.1706 USD quarterly

Closing Price:             $17.68 (December 16, 2021)

Yield:                        4.82% 

The stock is currently 4.82% (with the CAD equivalent of dividend), which is 53 bps higher than the stocks own 5-year average yield. 

 

Investment # 3   Transalta Renewables

TransAlta Renewables Inc. develops, owns, and operates renewable power generation facilities. As of March 3, 2021, it owned and operated 23 wind facilities, 13 hydroelectric facilities, 7 natural gas generation facilities, 1 solar facility, 1 natural gas pipeline, and 1 battery storage comprising an ownership interest of 2,537 megawatts of generating capacity located in the provinces of British Columbia, Alberta, Ontario, Quebec, and New Brunswick; and the States of Wyoming, Massachusetts, and Minnesota, as well as the State of Western Australia. The company was incorporated in 2013 and is headquartered in Calgary, Canada. TransAlta Renewables Inc. is a subsidiary of TransAlta Corporation. (Source: Yahoo Finance)

Transalta Renewables is often referred to as a yield co.  This company is 60% owned by TransAlta, which means Transalta has a large interest in the success of the company.

At a future date,  TransAlta could acquire 100% of TransAlta  Renewables.

The dividend has remained the same for years and the stock has run up in the last couple of years.  The run up in price is likely due to investors looking to be in the renewable energy space.  Renewable energy is the future. 

Ticker Symbol:       RNW.TO

Dividend:              $0.07833 per share monthly

Closing Price:        $18.23 (December 16)

Yield:                    5.16%

The stock is currently yielding 5.16%, which is 117 bps below the stocks own 5 year average yield of 6.33%.   

To find out some the current facilities in operation or development, click here. 

Summary 

These 3 companies play a vital role in the transportation and utility sector.  

New Flyer Group will play an even more important role in the future as the demand for cleaner public transit vehicles will grow to help reduce global emissions.

Algonquin Power and Utilities and TransAlta Renewables provide utilities that people need.  Renewable energy will be even more important in the years to come as more countries phase out or reduce their dependency on fossil fuels.

Disclosure:  Long NFI.TO, AQN.TO

Disclosure:  Long RNW.TO (in a "savings" account)

DISCLAIMER

I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

Investing With A Climate Change Focus

COP26 is wrapping up. COP26, or the 26th conference of the parties, have discussed how to tackle climate change.  The goal is to take massive action to reduce the affects of climate change.

Climate change affects our lives in all ways.  Insurance claims from climate change related disasters have caused insurance premiums to increase for majority of the population.  The quality of life for people have been affected all over the world.  Extreme weather events occur at a more frequent rate.

The amount and size of wildfires have increased.  Locations that have experienced drought or less precipitation are at risk of severe wildfires.  Things such as a lightning strike, or a burning cigarette butt can lead to a fire.  This can lead to a wildfire that can increase in size at a quick pace due to very dry conditions.   In North America, we have seen this during the most recent summer.  A small community in British Columbia, Lytton, burned to the ground during a heat dome event.  The day prior to the town burning to the ground, Lytton reached a temperature of 49.6°C.  This is the highest temperature ever recorded in Canada.

Hurricanes have caused more destruction in recent years as they are stronger.  This is due to the warming of the oceans.

Do you want to be part of companies with a renewable energy focus and collect passive income at the same time?

I am going to discuss to investment options that an investor might want to consider on their investing journey.

Investment #1 - Brookfield Renewable Partners

Brookfield Renewable Partners is a pure-play renewable power company that operates across the globe.  Brookfield Renewable Partners are involved in solar, wind, hydro electric, and storage in North America, South America, Europe and Asia.  

A general break down of operations in 2021 are as follows:

• Hydro  ->  8000 MW in operation and 2600 MW in development
• Wind   -> 5000 MW in operation and 8600 MW in development
• Solar   -> 2200 MW in operation  and 17,300 MW in development

Brookfield Renewables owns directly or partially owns around 6000 renewable power generating facilities across the globe.

Brookfield Renewable Partners trades on the Toronto Stock Exchange under the ticker symbols BEP.UN and BEPC.  The company also trades on the NYSE under the symbols BEP and BEPC. 

Brookfield currently pays a $0.30375 USD quarterly dividend.  The companies aims to grow its distribution / dividend by 5% to 9% per year. 

Investment #2 -  Fortis Inc.

Fortis Inc is an electrical utility holding company with it's headquarters located in the Canadian province of Newfoundland and Labrador.  The company has operations in Canada, United States, Central America and the Caribbean.  

The following graphic is from their most 2020 annual report.  

Revenue grew from $3.747 billion in 2011 to $8.935 billion in 2020.  That's a CAGR of 10.14% over the last 10 years. 

Fortis pays a quarterly dividend of $0.535 CAD and has increased the dividend for 48 consecutive years. This is the second longest streak in Canada. The most recent dividend increase was 5.94% and was announced in September 2021.  The company has a goal to grow the dividend annually 6% through 2025. 

The stock trades on the Toronto Stock Exchange and New York Stock Exchange under the ticker symbol FTS.

Investment # 3  Emera Inc.

Emera is an energy and services company that operates through its various subsidiaries.  Emera delivers energy to its customers in Canada, United States and the Caribbean. 

From Emera's 2020 annual report, the following graphic indicates part of their climate commitment.

Click to Enlarge

The company grew revenue from $2.064 billion in 2011 to $5.506 billion in 2020.  That's a CAGR of 11.52% over the last 10 years.

Emera pays a quarterly dividend of $0.6625 per share.  The most recent dividend increase was 3.92%.  Since 2000, the dividend has grown at a CAGR of approximately 6%.  Emera is targeting growing their dividend annually 4-5% through 2024.

Emera trades on the Toronto Stock Exchange under the ticker symbol EMA.

Summary:

Brookfield Renewable Partners is in the renewable energy space.  Emera and Fortis will be transitioning their operations to a more renewable focus in the coming years.  

I own all 3 stocks which include both BEP.UN and BEPC.  I started to accumulate shares in Emera in 2011 and never sold any shares. 

These 3 companies allow people to live their day to day lives.  

Disclosure:  Long EMA, FTS, BEP.UN, BEPC

DISCLAIMER

I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.