Renewable energy stocks have been one of the most intriguing sectors for investors. According to the U.S. Energy Information Administration, the share of U.S. electricity generation that comes from renewable sources may double from 21% in 2020 to 42% in 2050. And that’s on top of the pronounced, intentional shift towards electric vehicles.
In short, the opportunity in renewable energy is massive. But has it been the most profitable? Not necessarily. Investing in pure play renewable energy companies means investing in companies that, in many cases, are not yet profitable. It’s possible to catch a stock at the right time, but frequently, these stocks can leave investors wanting more.
One way to mitigate that risk is to buy shares of oil and gas companies that are also investing in clean energy. This isn’t being done for completely altruistic reasons. Many of these companies know that the math of traditional oil exploration and production are ending. But this isn’t new information for these companies. For the better part of 30 years, many of the largest oil and gas companies have been investing in the renewable energy sector.
And what these companies bring to the table at a time of volatility is stable revenue and earnings and, in many cases, a healthy dividend. In this article we’ll look at a few oil and gas stocks that also offer investors exposure to the renewable energy sector.
A Leader in Reimagining Energy
The first company to look at is BP (NYSE: BP). From my earliest days as an investor, I knew that BP was a pioneer when it came to investing in renewable energy. Today that is showing up in the company’s strategy of reimagining energy. The company has some impressive facts for investors to consider.
The company was among the first of the major oil and gas companies to announce a net zero ambition. And the company claims to be “the only oil and gas company aiming to be net zero across our operations, production and the energy products we physically trade and sell.” This is in addition to having over 16,000 electric charging points as well as significant investments in wind, biofuels, and hydrogen.
Investing in BP stock has been a winning proposition for investors. The stock is up over 25% for the year and in its most recent earnings report on August 1, 2022, the company delivered a strong beat in both revenue and earnings. BP slashed its dividend in half during the pandemic, but it is climbing higher and now pays an attractive yield of 4.63%.
The Name Has Changed, But Not the Commitment
Next on the list is Shell (NYSE: SHEL) which most investors know as Royal Dutch Shell. The energy company changed its name in January 2022. Like BP, Shell has been actively planning its transition to renewable energy sources for many years. According to the company, it has approximately 50 gigawatts of renewable generation capacity either in operation, under construction, or as potential projects.
In the summer of 2022, the company released three significant announcements that demonstrates its leadership and commitment to renewable energy:
- Made a final investment decision to build Europe’s largest renewable hydrogen plant
- Confirmed plans to purchase 100MW of new build solar capacity in the United Kingdom from Anesco
- Completed its acquisition of the Spring Energy group a renewable energy platform
SHEL stock is up 32% in the last 12 months. Like BP, the company cut its dividend in 2020, but has been increasing it and it currently has a dividend yield of 3.82%.
Playing the Long Game with Renewables
The last company on this list is Chevron (NYSE: CVX). Of the three stocks on this list, CVX stock has performed the best over the last 12 months posting a 61% gain. Much of that is due to its leadership in transporting liquefied natural gas (LNG) to Europe.
However, the company has its own renewable energy strategy. The company is making strategic investments in areas where it believes it can add value such as renewable natural gas, renewable diesel, and sustainable aviation fuel.
Beyond those initiatives, Chevron is making investments in hydrogen and carbon capture technology for their long-term potential. Interestingly, the company uses wind and solar in their operation, but unlike BP and Shell, the company has no plans to market either energy source.
Chevron is also a dividend aristocrat having increased its dividend for 35 years. The dividend yield is currently at an attractive 3.64%
Before you consider BP, you'll want to hear this.
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