Renewable energy stocks are 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 could double from 21% in 2020 to 42% in 2050. And that’s on top of the outspoken, deliberate shift to electric vehicles.
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In short, the opportunities in renewable energy are enormous. But has it been the most profitable? Not necessary. Investing in pure-play sustainable energy companies means investing in companies that in many cases are not yet profitable. It is possible to grab a stock at the right time, but often these stocks can leave investors wanting more.
One way to mitigate that risk is to buy stocks of oil and gas companies that also invest in clean energy. This is not done for completely altruistic reasons. Many of these companies know that the math of traditional oil exploration and production is coming to an end. But this is not new information for these companies. For nearly 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 in a time of volatility is stable earnings and earnings and, in many cases, a healthy dividend. In this article, we look at some oil and gas stocks that also offer investors exposure to the renewable energy sector.
A leader in reinventing energy
The first company to look at is BP (NYSE: BP). From my earliest days as an investor, I knew BP was a pioneer when it came to investing in renewable energy. Today that is reflected in the business strategy of reinvent energy. The company has some impressive facts for investors to consider.
The company was one of the first major oil and gas companies to announce a net zero ambition. And the company claims to be “the only oil and gas company that wants to be net zero on our operations, production and the energy products we physically trade and sell.” In addition to more than 16,000 electric charging points and substantial investments in wind, biofuels and hydrogen.
Investing in BP stock is a winning proposition for investors. The stock is up more than 25% this year and in its most recent earnings report on August 1, 2022, the company showed a strong hit in both sales and earnings. BP has halved its dividend during the pandemic, but it is climbing higher and is now paying 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 the transition to renewable energy sources for 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 major announcements demonstrating its leadership and commitment to renewable energy:
- A final investment decision taken to build Europe’s largest renewable hydrogen plant
- Confirmed plans to buy 100 MW of new-build UK solar capacity from Anesco
- Completed the acquisition of the Spring Energy group, a renewable energy platform
SHEL stock is up 32% in the past 12 months. Like BP, the company cut its dividend in 2020 but has increased it and 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 past 12 months with a gain of 61%. 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 can add value, such as renewable natural gas, renewable diesel and sustainable jet fuel.
In addition to these initiatives, Chevron is investing in hydrogen and carbon capture technology for their long-term potential. Interestingly, the company uses wind and solar power in its operations, but unlike BP and Shell, the company has no plans to bring either energy source to market.
Chevron is also a dividend aristocrat who has increased its dividend for 35 years. The dividend yield is currently at an attractive 3.64%
