These investments should generate high-powered total returns for investors. NextEra Energy expects to grow its adjusted earnings per share at or near the top end of its 6% to 8% annual target range through 2027 while increasing its dividend (nearly 3% yield) by around 10% annually through 2026. Add it up, and the company could produce double-digit total returns annually in the coming years.

Brookfield Renewable is also among the few companies with the scale to be a leader in capitalizing on the expected surge in power demand. The company has 37 GW of operating capacity across the world. While it has a global platform, Brookfield has a heavy presence in the U.S. after acquiring several renewable energy developers in recent years. It agreed to invest up to $2 billion into Scout Clean Energy and Standard Solar in 2022 and bought Duke Energy‘s commercial renewable energy platform for $1.1 billion in 2023.

The company currently has a staggering 200 GW of projects in various stages of development, including 65 GW in its advanced-stage pipeline. Brookfield expects to commission an average of 10 GW of capacity annually in the coming years. That includes 10.5 GW for Microsoft in the U.S. and Europe in the 2026 to 2030 time frame.

Those projects help support its robust growth profile. It expects development projects alone to add an average of 5% to its funds from operations (FFO)d per share annually over the next several years. Add in higher power prices and accretive acquisitions, and Brookfield believes it can grow its FFO per share by more than 10% annually over the next decade. That should give it the power to increase its dividend (nearly 5% yield) by 5% to 9% per year. Add it up, and Brookfield Renewable could produce annual total returns in the mid-teens from here.

The U.S. will need to develop a tremendous amount of renewable energy capacity over the coming years. NextEra Energy and Brookfield Renewable are among the few companies with the scale, expertise, and financial capacity to be leaders in developing new renewable energy capacity. It should fuel robust growth, which, when added to their dividends, should enable them to generate attractive total returns for investors. That makes them look like no-brainer stocks to buy to capitalize on this massive megatrend.

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*Stock Advisor returns as of November 18, 2024

Matt DiLallo has positions in Brookfield Renewable, Brookfield Renewable Partners, and NextEra Energy. The Motley Fool has positions in and recommends Microsoft and NextEra Energy. The Motley Fool recommends Brookfield Renewable, Brookfield Renewable Partners, and Duke Energy and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

2 No-Brainer Energy Stocks to Buy to Cash in on the Coming Power Surge was originally published by The Motley Fool