Solar energy demand faces near-term challenges in the U.S.

Invesco Solar’s strategic positioning in the solar energy sector aligns with global investment flows into clean energy technologies. For many years, solar power’s cost competitiveness—aided by government subsidies and incentives—and scalability drove adoption worldwide as countries increasingly viewed renewable energy as essential for energy security and economic competitiveness.

But recently, the Trump administration has moved to sharply cut those subsidies and incentives—including the Biden administration’s Inflation Reduction Act’s solar tax credits.

Meantime, though, this ETF offers a diversified portfolio of stocks across the solar value chain and provides fund investors with comprehensive exposure to this sector’s growth prospects.

INVESCO SOLAR ETF (New York symbol TAN) tracks solar-related companies (including technology firms and utilities) listed on global exchanges.

These companies include solar power equipment producers, solar energy storage system companies, raw materials and components suppliers, solar power system installation and maintenance providers, and solar equipment fabrication system manufacturers.

The fund’s top holdings are NEXTracker Inc. (U.S. solar trackers), 9.8%; First Solar (China; solar panels), 9.5%; Enphase Energy (U.S.; home solar systems), 8.4%; GCL Technology (China; polysilicon), 6.7%; Enlight Renewable Energy, 47%; Sunrun (U.S.; panels), 4.6%.; and Xinyi Solar (China; solar panels), 4.3%

Invesco Solar ETF’s MER is a relatively high 0.67%, while the dividend yield is 0.4%.

Clean energy stocks face near-term challenges

Renewable stocks have drifted down since early 2021; that follows big run-ups in 2020 on former U.S. President Joe Biden’s support for sun, wind and hydro power—plus strong investor interest in stocks gaining from environmental concerns.

Plus, more recently, the Trump administration has moved to sharply cut the Biden administration’s Inflation Reduction Act’s solar and wind tax credits.

All in all, while the outlook for solar power stocks is challenging in the near term, if you’re looking for exposure to the expanding solar power industry, the Invesco Solar ETF provides you with broad diversification.

Recommendation in Canadian Wealth Advisor: Invesco Solar ETF is okay to hold for aggressive investors who want to invest in solar-power stocks.

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Scott Clayton

Scott is an associate editor at TSI Network. He is the lead reporter and analyst for Dividend Advisor, Power Growth Investor and Canadian Wealth Advisor and a member of the Investment Planning Committee. Scott began his investment and financial career working with Pat McKeough at The Investment Reporter in the 1980s. Subsequently, he worked at the Financial Post Corporation Service for 10 years. He joined TSI Network in 1998. He is a Bachelor of Economics graduate of York University, and he also has an M.B.A. from the Schulich School of Business.

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