When I talk about green stocks, I’m referring primarily to renewable energy stocks. However, green stocks do also have a broader reach, to include companies that I feel are making an effort to minimise their carbon footprint or other notable initiatives. Investing in these types of stocks helps my conscience, but here are some that I also think could offer me good returns for years to come in the future.
Momentum in the hydrogen space
The first green stock I like is ITM Power (LSE:ITM). The business designs, manufactures, and integrates electrolysers to produce green hydrogen. It has a range of commercial potential uses, including as fuel. The only waste is water and green hydrogen can be stored in tanks for long periods of time — it’s easy to see why people are excited.
ITM Power is really starting to get up and running. The stock won a project grant from the German government in January. It has secured investment from the UK government last November for the first phase of an ongoing project at the Whitelee Windfarm hydrogen facility.
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The share price is down 11% over the past year, but up 50% over two years. I think that with momentum from the recent investments and the prospect of increased production in the next year or so, the share price could really start to take off.
There is some risk that the market finds issues with green hydrogen in practice, but for the moment I think it’s a viable form of clean energy for the future.
A green investment stock
Another company that fits the bill is Greencoat Renewables (LSE:GRP). I think this is a no-brainer buy not for share price growth, but rather for dividend income in my portfolio. The company invests in wind and other renewable energy projects in Europe, with the aim of distributing returns via dividends. Currently the dividend yield sits at 5.22%, with the share price up 1% over the past year.
Wind energy is an area of high public and private investment, and one that I think will continue in the future. I like the fact that Greencoat has project in different countries in its portfolio. Although there is a lot of exposure in Ireland, it also has projects in France, Spain, Finland, and Sweden. This should diversify business streams in the future, helping to mitigate any potential problems.
I do know that getting wind projects up and running can be very expensive. This might make it tough for Greencoat to step up to the next level as private investors might favour cheaper green energy options. However, I think there is enough funding already in this space to ensure the dividends stay generous and consistent.
I think that both green stocks will perform very well in the future given the sector. Therefore, I’m wanting to buy shares in both companies at the moment.
