3 Top Energy Stocks With Yields of 3-4%

Looking to add a dividend stock to your portfolio? If so, consider energy stocks such as Canadian Utilities Limited (TSX:CU), Hydro One Ltd. (TSX:H), and Peyto Exploration & Development Corp. (TSX:PEY).

| More on:
The Motley Fool

As a dividend investor, I’m always on the lookout for high-quality stocks that can boost my portfolio’s returns and, after a recent search of the energy sector, I came across three great opportunities. Let’s take a quick look at each, so you can determine if you should invest in one of them today.

1. Canadian Utilities Limited

Canadian Utilities Limited (TSX:CU) is a diversified global corporation with operations in the following four industries:

  • Electricity: electricity generation, transmission, and distribution
  • Pipelines & Liquids: natural gas transmission, distribution, and infrastructure development, energy storage, and industrial water solutions
  • Retail Energy: electricity and natural gas sales
  • Structures & Logistics: workforce housing, innovative modular facilities, construction, site support services, and logistics and operations management

It pays a quarterly dividend of $0.325 per share, or $1.30 per share annually, giving its stock a yield of about 3.4% at current levels.

Investors must also note that Canadian Utilities’s 10.2% dividend hike in January has it on pace for 2016 to mark the 44th consecutive year in which it has raised its annual dividend payment, tying it with Fortis Inc. for the longest active streak for a public corporation in Canada.

2. Hydro One Ltd.

Hydro One Ltd. (TSX:H) is Ontario’s largest electric transmission and distribution company. It delivers electricity to more than 1.3 million customers across the province and to industrial customers and municipal utilities.

It pays a quarterly dividend of $0.21 per share, or $0.84 per share annually, giving its stock a yield of about 3.2% at current levels.

Investors must also make the following two notes.

First, Hydro One completed its IPO in November of last year, and it declared its first quarterly dividend in February of this year.

Second, it has a target dividend-payout range of 70-80% of its net earnings.

3. Peyto Exploration & Development Corp.

Peyto Exploration & Development Corp. (TSX:PEY) is one of the largest explorers and producers of unconventional natural gas in Alberta’s Deep Basin. Its assets include 440,000 net acres of land, nine operated gas plants, and 1,600 kilometres of pipeline.

It pays a monthly dividend of $0.11 per share, or $1.32 per share annually, giving its stock a yield of about 3.8% at current levels.

Investors must also note that Peyto has raised its annual dividend payment for three consecutive years, and its ample amount of funds from operations could allow it to continue this streak in 2016 by announcing a slight hike before the end of the year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joseph Solitro has no position in any stocks mentioned.

More on Dividend Stocks

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

2 Stocks Under $50 New Investors Can Confidently Buy

There are some great stocks under $50 that every investor needs to know about. Here’s a look at two great…

Read more »

think thought consider
Dividend Stocks

Down 10.88%: Is ATD Stock a Good Buy After Earnings?

Alimentation Couche-Tard (TSX:ATD) stock might not be the easy buy-case it once was. Here’s a look at what happened.

Read more »

money cash dividends
Dividend Stocks

TFSA Dividend Stocks: Earn $1,200/Year Tax-Free

Canadian stocks like Fortis are a must-have in your portfolio to earn tax-free yields for decades.

Read more »

sale discount best price
Dividend Stocks

1 Dividend Stock Down 11 Percent to Buy Right Now

Do you want a great dividend stock down 11% that can provide years of growth potential? Here's one heavily discounted…

Read more »

Growth from coins
Dividend Stocks

1 Grade A Dividend Stock Down 11% to Buy and Hold Forever 

If you're looking for the right dividend stock at the right price, you're going to want to consider this insurance…

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

Are you looking for dividend stocks to buy right now? Here are two top picks!

Read more »

edit Taxes CRA
Dividend Stocks

Tax Time: How to Keep More of Your Money

Nearly everyone hates paying taxes, although Canadians can lessen the financial pain with the right tax strategies.

Read more »