Income

2 Renewable Energy Stocks I’d Buy For Lifetime Passive Income!

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I think these UK dividend stocks could be great ways to generate long-term passive income. Here’s why I would buy them for my wallet today.

here comes the sun

Renewable energy stocks could prove to be very lucrative investments over the next decade. That’s why I bought shares in the green energy giant The Renewable Infrastructure Fund in 2022.

We all know the demand for clean energy is set to explode over the next few decades as the climate emergency escalates. The International Energy Agency estimates that renewable energy capacity will increase by 60% between 2020 and 2026, to reach 4,800 GW.

Funds that invest in green energy could generate exceptional earnings growth in this environment. But that’s not the only reason I love them. Because electricity is an essential commodity, these stocks also have defensive qualities that provide excellent earnings stability. This is something that particularly appeals to me as someone looking for reliable dividend income.

Today, I also plan to increase my exposure to renewable energy stocks. And I’m thinking of doing it by investing in American Solar Fund (LSE: USF).

The company has met its dividend target of 5.5 cents per share in 2021. It also plans to increase the annual payout by 1.5% to 2% in coming years.

Made in the USA

As the name suggests, this share is focused on the United States. That’s what makes it particularly appealing to me.

A chart showing US Solar Fund assets in California, Oregon, North Carolina and Utah
Source: Presentation from the 2022 American Solar Fund AGM

The United States has long been one of the most favorable territories for renewable energy stocks. And things got even better this week as well when the Inflation Reduction Act came into force. The law commits $370 billion in green energy infrastructure spending and will provide hefty tax credits to companies like the US Solar Fund.

Renewable energy stocks like this of course come with risks. During unfavorable periods, weather benefits could suffer if electricity generation declines. But over a long-term horizon, I think the US Solar Fund should still prove to be a lucrative part in the UK.

High tension

Gore Street Energy Storage Fund (LSE: GSF) could be another very profitable way to play the green energy revolution. This is despite the company’s currently high debt levels.

Solar and wind power generation is unpredictable. And so technology is needed to store electricity during productive times. This allows for a constant flow of electricity when the sun is not shining and the winds are low. It’s Gore Street’s specialty.

The company has a series of battery storage assets in Britain, the United States, Germany and Ireland. And he’s aggressively expanding his portfolio right now. Total battery capacity soared to 628.5MW in March, up 65% year-on-year.

I also like Gore Street because of its potentially lucrative dividend policy. The company is targeting annual dividend payments based on a 7% return on average net asset value per share. This is subject to a minimum payout target of 7p per share. By the way, that 7p low gives a nice 5.9% at current prices.