The green recovery! I’d buy these renewable energy stocks to profit

Boris Johnson is planning a green recovery for the UK economy. To this end, the government is planning to invest £12bn in renewable energy initiatives over the next few years. 

The prime minister also wants to turn the country into the Saudi Arabia of wind by 2030. Estimates suggest this could cost as much as £50bn. That might appear to be an extraordinary sum, but a significant auction of wind energy rights next year could attract up to £20bn of investment from the private sector alone. 

And it’s not just the UK that is investing heavily in renewable energy. Other countries are spending tens of billions on new green energy projects too. 

With that being the case, I’m currently looking for renewable energy stocks that may be able to profit from this theme. 

Renewable energy investments

One organisation leading the charge is energy group SSE (LSE: SSE). Last week, the company set out plans to triple its renewable energy generation by 2030.

It is already planning the world’s largest offshore wind farm. The 3.2GW Dogger Bank offshore wind farm could be operational by 2026. 

In total, the group is planning to invest £7.5bn in renewable energy projects in the near term. A chunk of this funding will come from asset sales.

Management is planning to flog approximately £3bn of assets over the next few years. This will help reposition the business away from its traditional footprints and towards renewable energy. 

Based on the shift, I’m optimistic about the company’s outlook. Green energy is a booming business, and costs are significantly lower. This should help the enterprise’s profit margins and growth potential. 

And as the business perseveres with its growth objectives, investors will be paid to wait. The stock currently supports a dividend yield of 6%.

Wind income

Another renewable energy income play I’ve been taking a closer look at recently is Greencoat UK Wind (LSE: UKW). 

This company owns and operates a selection of wind farms throughout the UK. These farms provide a steady stream of income for the business. Management reinvests a portion of the income. The group also returns a large chunk of cash to investors every year. 

It recently declared a 1.8p per share dividend for the quarter to the end of September. That suggests an annualised dividend of 7.2p per share, or a dividend yield of 5.5% on the current stock price. 

When it comes to growth, the firm has lots of options. Over the past few years, the company has built a £2.2bn portfolio of wind farms around the UK. It’s used capital from existing assets, debt and cash from investors to build this renewable energy bank of assets. 

With a strong pipeline of new wind farms under construction around the country, Greencoat should have lots of options to buy new assets in future. As such, I think this stock has the potential to provide investors like me with steady dividend growth for years to come.