Conventional
wisdom
holds
that
stocks
with
renewable
energy
exposure
are
young,
fast-growing
companies
with
volatile
share
prices,
lofty
valuations,
and
dividend
payouts
that
are
skimpy
at
best.
However,
there
are
well-established
companies
with
strong
profiles
that
offer
high
dividend
yields
and
trade
at
attractive
prices
in
this
space.
In
this
article
we
flag
five
companies
that
rely
heavily
on
renewable
energy,
and
those
are:
• Proximus PROX
• Vodafone
Group VOD
• Engie ENGI
• Volkswagen VOW3
• Mercedes-Benz
Group MBG
Screening
for
Undervalued
High-Yielding
Renewable
Energy
Stocks
For
this
article,
we
looked
at
the Morningstar
Global
Markets
Renewable
Energy
Index,
which
includes
companies
that
derive
at
least
5%
of
revenues
from
renewable
energy
or
green
transportation,
as
well
as
those
that
use
renewable
energy
for
at
least
25%
of
their
energy
requirements,
as
measured
by
the
Sustainalytics
Sustainable
Activities
Involvement
Metrics.
We
screened
for
stocks
covered
by
Morningstar
analysts
and
then
sorted
them
by
forward
dividend
yield
to
find
the
five
with
the
highest
payouts.
All
these
stocks
are
undervalued,
carrying
Morningstar
Ratings
of
4
or
5
stars.
Proximus
• Fair
Value
Estimate:
€10.50
• Price/Fair
Value:
0.73
• Morningstar
Uncertainty
Rating:
Medium
• Economic
Moat:
Narrow
With
a
forward
dividend
yield
of
18.23%,
this
Belgian
telecom
operator
tops
our
list.
Proximus’
stock
is
down
1.53%
this
year.
Over
the
last
12
months,
it
is
up
21.14%.
Analyst Javier
Correonero writes,
“we
are
pleased
with
Proximus’
performance
on
the
revenue
front,
as
it
can
pass
price
increases
to
customers
with
little
impact
on
churn
rates.”
Vodafone
Group
• Fair
Value
Estimate:
£1.25
• Price/Fair
Value:
0.57
• Morningstar
Uncertainty
Rating:
Medium
• Economic
Moat:
None
European
telecom
giant
Vodafone
has
the
second-highest
forward
dividend
yield
in
the
index,
at
10.76%.
Vodafone’s
stock
is
up
9.47%
in
the
year
to
date
and
11.16%
in
the
last
12
months.
Vodafone
is
currently
trading
at
0.71
GBP
per
share.
Correonero
writes,
“we
are
maintaining
our
GBP
1.25
fair
value
estimate
and
see
the
shares
as
undervalued,
although
we
do
not
see
any
near-term
catalyst
in
place
[…].
However,
it
is
worth
noting
that
this
high
dividend
yield
will
not
last
forever.”
He
expects
Vodafone
to
halve
its
dividend
in
fiscal
2025
to
“a
maintainable
level.”
Engie
• Fair
Value
Estimate:
€18.00
• Price/Fair
Value:
0.79
• Morningstar
Uncertainty
Rating:
Medium
• Economic
Moat:
None
Engie
is
a
global
energy
firm
that
operates
Europe’s
largest
gas
pipeline
network
in
France
and
a
global
fleet
of
conventional
and
renewable
power
plants.
The
stock
yields
10.1%.
The
shares
are
down
2.06%
in
the
year
to
date
but
up
4.50%
over
the
last
12
months.
Analyst Tancrede
Fulop calls
the
shares,
currently
at
€14.16,
undervalued.
He
adds:
“Record
profits
posted
in
2022
and
2023
drove
a
surge
in
the
dividend.
In
the
future,
the
dividend
will
decrease
in
the
wake
of
the
profits
normalisation,
although
we
expect
Engie
to
apply
the
high
end
of
the
payout
ratio”
to
lessen
the
dividend
decline.
Currently,
the
company
pays
65%-75%
of
earnings
as
dividends.
Volkswagen
• Fair
Value
Estimate:
€352.00
• Price/Fair
Value:
0.3
• Morningstar
Uncertainty
Rating:
High
• Economic
Moat:
None
German
auto
giant
Volkswagen
has
a
forward
dividend
yield
of
8.46%.
Its
stock
has
risen
3.94%
in
the
year
to
date.
Over
the
last
12
months,
its
stock
has
fallen
5.32%.
The
stock
is
trading
at
€107.15,
the
steepest
discount
to
fair
value
in
the
Global
Markets
Renewable
Energy
Index. Nicolas
Owens notes
that
Volkswagen
“is
successfully
executing
a
global
automotive
strategy
and
has
one
of
the
most
aggressive
plans
to
switch
to
battery
electric
vehicles
from
internal
combustion
powertrains.”
Mercedes-Benz
Group
• Fair
Value
Estimate:
€117.00
• Price/Fair
Value:
0.55
• Morningstar
Uncertainty
Rating:
High
• Economic
Moat:
Narrow
Rounding
out
our
list
is
another
German
auto
giant,
Mercedes-Benz,
with
a
forward
yield
of
8.28%.
Its
stock
is
up
10.79%
so
far
this
year.
Over
the
last
12
months,
its
stock
is
down
4.26%.
The
stock
is
currently
trading
at
€64
per
share.
Analyst Krzysztof
Smalec writes
that
“despite
near-term
headwinds,
our
long-term
outlook
is
unchanged,
and
we
reiterate
our
€117
per
share
fair
value
estimate.”
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