5 High-Yielding Global Renewable Energy Stocks

Conventional wisdom holds that renewable energy stocks 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.

• 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.

Top-Yielding Global Renewable Energy Stocks

Here’s a closer look at the five stocks:

Proximus

• Fair Value Estimate: EUR 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: GBP 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: EUR 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 EUR 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 normalization, 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: EUR 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 EUR 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: EUR 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 EUR 64 per share. Analyst Krzysztof Smalec writes that “despite near-term headwinds, our long-term outlook is unchanged, and we reiterate our EUR 117 per share fair value estimate.”