Do you have $ 3000? Here are 3 solar stocks to buy and hold for the long term

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Solar energy is at the dawn of a remarkable inflection point. Over the next two years, it will be cheaper to build near-firm solar capacity (i.e. a solar power project with battery storage) than to generate electricity from fossil fuels. .

For this reason, solar energy development is poised to accelerate, with the industry poised to double the amount of new capacity it adds each year by 2030. This forecast suggests that solar energy stocks have a bright future.

Three solar-focused companies that are expected to benefit from the growth of the sector are Atlantica sustainable infrastructure (NASDAQ: AY), Consolidated Edison (NYSE: ED), and SolarEdge Technologies (NASDAQ: SEDG). For this reason, they make great stocks to buy and hold as an industry-focused mini-portfolio. Investors with $ 3,000 – although any amount will suffice – could divide that money evenly among the three to take advantage of their potential in an increasingly solar powered world.

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Bet big on a sustainable future

Atlantica Sustainable Infrastructure has a diversified portfolio of infrastructure assets geared towards a more sustainable future, such as renewable energy, natural gas, electricity transmission and water desalination. Renewable energies constitute the bulk of its turnover at 69% of the total.

Atlantica boosted its renewable business by making two solar power acquisitions last year. In August, it closed the purchase of a partner’s stake in Solana, an American solar project, for 290 million dollars. At the same time, in December, it joined forces with its strategic partner, utility Algonquin Power & Utilities (NYSE: AQN), to buy a solar project in Colombia for $ 20 million. The partners have also agreed to potentially co-invest in some additional solar projects in this country.

Given the expected acceleration of solar energy development in the coming years, Atlantica should have many additional investment opportunities. This should give the company the power to continue to grow its cash flow and 3.8% –productive dividend. These two sources of energy should enable Atlantica to produce attractive total returns over the long term.

A solar utility

Consolidated Edison is a utility focused on providing electricity to the New York City market. It is one of the cleanest utilities in the country, as 71% of its power generation capacity is renewable energy and the rest is cleaner burning natural gas. Most of its capacity – 57% – is solar power.

Consolidated Edison has quietly built one of the largest solar energy companies in the world. It is the second largest producer of solar energy in North America, with assets spread across the United States and the seventh in the world. Considering its size, it is ideally placed to take advantage of the acceleration of solar energy development in the years to come.

This focus on solar power has paid dividends to Consolidated Edison shareholders in recent years. The utility has increased its payments in each of the past 46 years, with the growth rate rising from 1.8% annualized between 2011 and 2015 to 3.3% annualized over the past five years, as it has increasingly focused on high efficiency solar energy. projects. This upward trend in the dividend – which currently shows an attractive 4.3% yield – looks likely to continue as the company remains focused on building new solar power projects in the country.

Well positioned in a booming market

SolarEdge manufactures an optimized inverter system that reduces the cost of energy produced by a solar system. This makes it a key component in making solar energy cheaper, thus contributing to its widespread adoption. In addition to inverters, SolarEdge has started to make inroads into other adjacent markets such as electric vehicle charging and energy storage.

The company has invested heavily to increase its manufacturing capacity and research and development of new technologies in order to remain at the forefront of the sector. It made these investments while maintaining a blue chip balance sheet with over $ 550 million in net cash at the end of the third quarter. For this reason, it has the financial flexibility to continue to expand its operations and invest in next-generation technology. These factors make it an important bullish element in the solar sector.

A large group of solar stocks

Atlantica Sustainable Infrastructure, Consolidated Edison and SolarEdge Technologies are all well positioned to benefit from the acceleration in solar energy development. Atlantica and Consolidated are focused on owning and developing cash-generating solar assets, making them great revenue growth drivers, while SolarEdge is a fast-growing component producer with many advantages. Given their slightly different focus on the solar business, they make a great basket of solar power to buy and hold for the long term.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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