Popular crypto-currencies like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) have been excruciatingly volatile. While the prices of both have skyrocketed over the past year, they have each fallen more than 30% from their highs of the past few weeks. This heartbreaking volatility is more than many investors want to manage.
Those looking for potentially rewarding investments without such wild swings are in the right place. We asked some of our contributors for ideas for stocks that offer compelling wealth creation potential without the volatility associated with cryptocurrency. Here is why they think Enbridge (NYSE: ENB), First solar (NASDAQ: FSLR), and Brookfield Infrastructure Partners (NYSE: BIP) are better options.
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Building on a solid foundation
Reuben Gregg Brewer (Enbridge): At first glance, Canadian pipeline giant Enbridge seems like a strange juxtaposition to digital currencies. However, the company has a set of offshore wind energy projects in Europe underway. This will help supply the world with clean energy that could be used to mine digital coins. The company’s clean energy activity represents only about 3% of EBITDA today, but it will increase in the years to come thanks to investments like this and others (including the transport of hydrogen).
That’s great, but what’s most interesting if you’re tired of the volatility in the cryptocurrency space is the remaining 97% of Adjusted EBITDA. About 54% comes from oil pipelines, 29% from gas pipelines and 14% from a natural gas distribution company. It is a North American category leader in each of these divisions. And it is these operations, and the reliable cash flow they generate, that will lay the foundation for the company’s future growth in renewable energy.
The best part, however, is that due to the negative stigma attached to carbon-based companies today, Enbridge’s dividend yield is 7%. And this is backed by more than 25 years of annual dividend increases. A clean energy shift and big quarterly dividend checks could lift your spirits – and help protect your portfolio from the often wild swings of the crypto world.
Future crypto mining could benefit this stock
Neha Chamaria (First solar): Cryptocurrencies have crashed in recent weeks. But if the intoxicating mix of high potential returns with high risk still turns you on, forget about crypto and consider investing in a solar stock that has also been squashed, but has a much more substantial growth catalyst than a crypto. change. In fact, there could be a connection between the two.
You see, cryptocurrencies fell earlier this month after You’re here CEO Elon Musk announced the suspension of vehicle purchases using Bitcoin due to “the increasing use of fossil fuels for Bitcoin mining”. The development has sparked debates about the use of crypto energy and how renewables might be an answer. In other words, crypto-miners could increasingly embrace renewable energy sources and provide the solar energy market an essential boost. One solar stock you might want to check out is First Solar, which is down almost 22% year-to-date.
First Solar is a leading provider of solar solutions and is known for its thin film photovoltaic modules which are more efficient and cost effective, and therefore an excellent choice for large scale solar projects. The company has always maintained a prudent balance sheet which has not only helped it survive lower cycles, but has given it the opportunity to invest, improvise and expand its technology.
In its most recent quarter, First Solar achieved a gross margin of 23% from 17% a year ago and expects to achieve a margin of 25% in the middle of its revenue and gross margin guidance for 2021 Cash balance between $ 1.8 billion and $ 1.9 billion, which is significantly higher than its 2020 net cash balance of $ 1.5 billion. With solar installation in the United States alone expected to triple over the next decade, First Solar has a lot of potential.
Image source: Getty Images.
A proven wealth creator
Matt DiLallo (Brookfield Infrastructure): The main attraction of buying or mining cryptocurrency is the ability to participate in a potential once-in-a-lifetime money making opportunity. Unfortunately, the promise of outsized returns almost always comes with a healthy dose of volatility. If you’re struggling to cope with price fluctuations, you might want to consider a less volatile business like Brookfield Infrastructure.
The company has a diversified portfolio of Infrastructure like pipelines, power lines, ports, toll roads and data centers. Most of these assets generate relatively stable cash flows supported by long-term fixed rate contracts. This gives Brookfield the cash to pay out an attractive dividend which is currently earning 3.8%.
However, don’t be fooled by the boring nature of Brookfield’s business model. The company has excellent investor enrichment experience. Since its inception over ten years ago, Brookfield has generated an average total annual return of approximately 18%. This allowed him to crush the S&P 500, which produced an annualized total return of 11% during that period. In other words, $ 10,000 invested in Brookfield Infrastructure at its inception would have reached more than $ 83,000.
There are many more wealth-creating benefits to come for Brookfield investors. The company expects to increase its profits by 7% to 14% per year in the coming years, while continuing to expand its infrastructure portfolio. This should allow it to increase its attractive dividend from 5% to 9% each year. This steadily increasing income stream should give Brookfield the power to continue producing rewarding total returns without the stomach-ache volatility that comes with the hunt for cryptocurrencies.
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Matthew DiLallo owns shares of Brookfield Infrastructure Partners, Enbridge, First Solar and Tesla. Neha Chamaria has no position in any of the listed securities. Reuben Gregg Brewer owns Enbridge shares. The Motley Fool owns stocks and recommends Bitcoin, Enbridge, and Tesla. The Motley Fool recommends BROOKFIELD INFRA PARTNERS LP UNITS, Brookfield Infrastructure Partners and First Solar. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.