It’s always exciting to look for the next multi-bagger stock, which will help you generate exponential returns. However, the road to riches is actually quite boring. So, it makes sense to allocate a significant portion of your capital towards blue-chip stocks with strong fundamentals that have the financial flexibility to thrive across business cycles.
In the last year, higher oil prices have allowed investors with exposure to energy stocks to derive outsized gains. Let’s take a look at three quality, dividend-paying energy stocks you can buy right now.
Enbridge
Shares of the Canadian energy giant, Enbridge (TSX: ENB)(NYSE: ENB) have surged by 24% in the last year. Despite its stellar gains, it also offers investors a tasty dividend yield of 6.15%. Enbridge has increased dividends by 10% annually for the last 27 years, showcasing its resilient business model.
In Q1 of 2022, Enbridge generated a distributable cash flow of $3.1 billion, or $1.52 per share, an increase of 10.7% year over year. Enbridge’s dividend-payout ratio stood at 57% in Q1, allowing it to reinvest in capital expenditures and expand the company’s base of cash-generating assets.
In 2022, Enbridge has forecast adjusted EBITDA between $15 billion and $16 billion, which would be an increase of 9% year over year. Its distributable cash flow per share is also forecast between $5.20 and $5.50, which is 8% higher than 2021 at the midpoint forecast.
While higher interest rates will impact profit margins for Enbridge, they might be offset by higher oil and gas prices.
Brookfield Renewable Partners
Shares of Brookfield Renewable Partners (TSX: BEP.UN)(NYSE: BEP) have fallen by 26% from all-time highs, increasing its dividend yield to 3.7%. One of the largest renewable energy players in the world, BEP has a combined capacity of 21 gigawatts and a pipeline of 62 gigawatts.
The company is optimistic about delivering annualized returns of over 15% to shareholders going forward, something it has already done for the last two decades. The growing demand for renewable energy will be a key driver of revenue and earnings growth for Brookfield Renewable Partners.
In Q1, Brookfield Renewable increased funds from operations by 18% year over year to US$243 million, or US$0.38 per unit. It closed investments of more than US$1.6 billion across multiple transactions and regions including its first carbon-capture solutions.
TC Energy
The final stock on my list is TC Energy (TSX: TRP)(NYSE: TRP), which is trading at an enterprise value of $125 billion. A Canada-based energy heavyweight, TC Energy also offers investors a forward yield of 5.2%.
TC Energy continued to benefit from its diversified portfolio of energy infrastructure assets in Q1, allowing the company to deliver strong results while meeting the growing demand for energy in North America.
Its comparable earnings of $1.12 per common share and funds from operations totaling almost $2 billion reflect TC’s solid performance and the utility-like nature of its business.
In its press release, TC Energy stated, “We are advancing our $25 billion secured capital program and expect to sanction over $5 billion of new projects per year throughout the decade, including recoverable maintenance capital.”
These investments should allow TC Energy to increase dividend investments at a steady pace over time.
