Renewable Energy

The Best Wind Energy ETF of 2019

Talk about the energy sector is often dominated by oil and gas. And for good reason.

For some countries, the oil and gas business is their economic bread and butter. Unlike other commodities, oil has massive geopolitical implications in addition to being an important energy resource.

In fact, Energy and Infrastructure Strategist David Fessler recently noted new developments in the Permian Basin – the world’s top-producing oil field – and how investors could profit.

But as important as oil and gas are for the global energy sector, they’re not everything.

Renewable energy has become a growing source of energy production here in the U.S. and abroad. And it’s an energy market trend worth watching in the years to come.

But before discussing the opportunities in the renewable energy market, let’s not pass over nuclear too quickly.

Currently, nuclear energy is the second-largest source of electric power in the U.S. after fossil fuels. In fact, last year, nuclear-powered electricity reached an all-time high.

Yet the growth in nuclear electricity generation has seen a huge slowdown – and has virtually flatlined – over the past decade, while the use of renewable resources has surged.

And just as renewables overtook coal’s market share, they now appear poised to overtake nuclear’s.

But not all renewables are the same.

For example, when most people think of renewables, their first thought is solar power.

Solar is the most familiar renewable energy source because of its accessibility. Solar panels and storage devices can be installed in residential and commercial areas more easily than the systems needed to capture other renewable sources.

Yet solar power contributed less than 10% of renewable energy production last year and less than 2% of total U.S. energy.

Chart - U.S. Electricity Generation by Renewable Source

In contrast, the two biggest sources of renewable energy are hydropower and wind, which make up 41% and 39% of U.S. renewable energy production, respectively.

Of the two, wind power is the fastest-growing and is on track to become the largest renewable energy source in 2019.

Now, one simple way to profit on wind energy is to use a targeted-sector strategy.

For that purpose, I like wind-focused ETFs like the First Trust Global Wind Energy ETF (NYSE: FAN) – up 20% year to date.

Chart - First Trust Global Wind Energy ETF

This play offers instant diversification within the wind energy sector. It’s perfect for investors who are bullish on the overall sector.

But for an individual stock play with a competitive advantage in its field, look no further than Vestas Wind Systems (OTC: VWDRY).

This Danish company is the world’s largest turbine producer and is responsible for about 13% of the world’s total installed turbines.

Shares are up double digits this year alone. And over the past five years, the stock has delivered nearly twice the performance of the S&P 500.

Chart - Vestas Wind Systems

Vestas is an excellent pure play for smart wind investors. You’d be wise to consider adding it to your portfolio.

Good investing,

Anthony