Are these 3 high-dividend renewable energy stocks no-brainer buys now?

Not so long ago, a lot of the UK’s renewable energy stocks looked like highly-valued jam-tomorrow punts. But I’m seeing some solid cash generation these days, and some share prices have been gaining. There’s tasty income to be had too.

Wind farms

Looking at Greencoat UK Wind (LSE: UKW), I see the share price is up 15% over the past 12 months.

Even after that, we’re still looking at a forecast price-to-earnings (P/E) multiple of only around seven. So that’s a company with growing profits, on an attractively low P/E. Oh, and there’s a forecast dividend yield of 5% for this year too, predicted to rise to 5.5% in two years.

I see some risks for Greencoat. Firstly, high electricity prices are currently boosting profits, and that won’t last forever. So there might be pressure on future dividends. Still, cover by earnings is currently strong, at over 2.5 times in 2021. There’s also £900m in debt on the books, which I don’t like.

But I do think Greencoat’s business model, of holding and operating a large portfolio of wind farms probably offers some of the lowest risk in the sector.

Batteries

Generation is one part of the renewable energy challenge, and storage is another. That’s where a company like Gore Street Energy Storage Fund (LSE: GSF) comes in. The shares have been erratic in the past couple of months, and are down 2% over the past year.

The mediocre share price performance means Gore Street’s forecast dividend yield stands at 6.2%, which I definitely like. Profits have been erratic. And the company has been raising capital to fund its expansion.

That makes it tricky to assess likely future earnings right now, and to get a feel for whether earnings are likely to cover dividends sustainably. I’m generally wary of companies that expand rapidly too.

Still, Gore Street is in the battery storage business, and it could be argued that grabbing a slice of the market as fast as possible is the way to go.

Energy giant

My final candidate is energy giant SSE (LSE: SSE), which is on a predicted dividend yield of 5.2%. SSE shares are up 9% over the past 12 months through a volatile year.

SSE has the benefit of being a well established energy infrastructure company. It operates across the UK and Ireland, and it invests heavily in low-carbon energy.

Its established base means it should be less risky than smaller firms just making inroads into the business. Buy saying that, dividends have been thinly covered by earnings in recent years — only around 1.1 times in the 2021-22 year.

So a couple of years of recession and pressure on electricity demand might leave things a bit stretched. Earnings haven’t been growing too strongly, with 2022 earnings coming in slightly below pre-pandemic 2018.

Which to buy?

I think all of these have their own potentials, and their own risks. But I’d probably buy all three, except for that one perpetual drawback — too many cheap shares out there, and not enough cash. Probably, I’ll invest in a renewable energy stock before too long though, and these are my top three candidates.