The world is transitioning towards renewable energy due to extreme climatic conditions. We are finally moving away from carbon-based fossil fuels towards alternative energy sources. It may take a while for us to fully adapt but I believe the sector is hot and investors should be looking for renewable energy stocks to buy. You can enjoy an early-mover advantage and also take home significant gains. The Europe and U.S. are gearing up for increased use of solar and wind energy as they are a cheaper alternative to oil. 

Renewable energy sources include wind, hydroelectric and solar power which supply about 20% of the electricity that is generated by the power sector. Due to increased concerns about climate change, companies are looking at ways they can do their part to decarbonize. A lot of companies have already signed power purchase agreements with electric generators to buy power produced from renewable sources. Even governments are working to increase global decarbonization by passing legislations that help increase investment in the sector. 

According to the International Energy Agency, the renewable power capacity is expected to grow by 2,400 gigawatts by 2027. Renewables will account for 90% of the global electricity expansion over the next five years. When it comes to renewable energy, this is only the beginning. The sector has immense potential to grow and expand in the coming years. With that in mind, let’s take a look at the best renewable energy stocks to consider for your portfolio.

NextEra Energy (NEE)

NextEra Energy (NYSE:NEE) is the largest producer of wind and solar energy in the world. If you look at its potential, the company is only rubbing the surface of the industry. Financially, the company is solid and has a track record of creating shareholder value. NEE stock has generated more than 1000% returns over the past 15 years and boosted the dividend at a 9.8% annual rate. The company has increased dividends for more than 25 consecutive years and expects to deliver around 10% dividend growth through 2024. 

The company reported better-than-expected first-quarter results and reported a revenue of $6.72 billion. NextEra Energy Resources, added 2,020 megawatts of new renewables to its backlog in the first quarter and its utility arm increased the solar portfolio to 4,600 megawatts which is the largest in the country. The company earned 84 cents per share beating estimates by 12%. NextEra Energy could have another solid quarter coming up which also makes it one of the best renewable energy dividend stocks to consider. 

NEE stock is trading close to $76 today and is up 9% over the past year. While it is still lower than the 52-week high of $91, it certainly has the potential to hit $100 this year. The company expects earnings to increase near its 6% to 8% annual target through 2025. It is one of the top utility stocks due to its consistent profitability and since it caters to households, one thing is certain, people will need power and this means NextEra Energy will continue generating revenue.

Brookfield Renewable (BEPC)

Another leader in the renewable energy sector, Brookfield Renewable (NYSE:BEPC) is one of the largest producers of hydroelectric power in the world. It is also increasing its investments and expertise in solar, wind, and energy storage. Since its inception, the company has steadily expanded its portfolio through acquisitions and projects that help drive growth. It recently acquired Origin Energy, an Australia-based power generator and energy retailer, for $10.2 billion. The company has grown its dividend by at least a 5% annual rate for the past 12 years. It enjoys a dividend yield of 3.98% and remains a one of the hot renewable energy growth stocks to add to your portfolio. 

One reason it is at the top of the renewable energy stocks to buy is the fact that it secured new investments in 2022 and closed about $12 billion of contracts for the next five years. This means it already has a secured business for the new few years which can power its growth steadily. BEPC stock is trading at $32.64 today and is up 15.46% year to date. The stock is trading upward and could hit $40 soon. The company sees even more growth ahead powered by the pipeline of renewable energy development projects as well as new acquisitions. This should allow it to raise the dividend each year. Financially, the company has a top-notch balance sheet and a robust portfolio of assets that enable it to keep going. The company announces results on May 2. 

SolarEdge Tech (SEDG)

When it comes to the best renewable energy stocks to buy, it is hard to miss out on SolarEdge Tech (NASDAQ:SEDG). The company develops and manufactures optimized inverter systems. It aims to maximize the power produced by solar and thus, reduce the cost of energy generation. With the growing adoption of solar energy across the world, the company will benefit in the long term. It is also using its technology and expertise to create other smart energy solutions and has made a number of acquisitions to gain products that help meet the needs of different market segments. It remains one of the best renewable energy stocks to buy for its growth potential.

SEDG stock is trading at $263.67 today and it has generated close to 400% results in the past five years. This was when renewable energy wasn’t in the limelight but today the future of this company looks magnificent. Despite the market route last year, SEDG stock has been consistently growing. 

It has a very profitable business and held $1 billion of net cash in 2022, which gives it the necessary flexibility to continue expanding further. Solar developers are set to benefit from the high electricity prices in Europe as the country tries to rely less on Russia’s natural gas. The company has enough orders to last until the end of the year. This is proof that its product is working and analysts have been upbeat about the stock. BofA analyst Julien Dumoulin-Smith has a Buy rating with a price target of $407. The company is set to announce results on May 3. 

On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.