2 Energy Companies to Hold for Decades

Despite the relative volatility in the sector and the changes it’s expected to go through in the next few decades, there are some energy companies you can hold long term.

| More on:
canadian energy oil

Image source: Getty Images

The energy sector is going through a transformative phase right now. The push for renewables and the advent of EVs together are expected to divert the two most important uses of fossil fuels in the world. And even though a saturation point is decades away, a few technological breakthroughs can fast-track the slow “decline” of traditional energy sources.

Keep in mind that the demand for oil and gas might not go away completely even by the end of the century. And even then, with the right approach and technologies, fossil fuels may find a way to coexist with green energy sources and renewables.

But even if that doesn’t happen, there are some energy stocks that are either positioned the right way or have proven their mettle during past difficult phases that can survive and remain profitable for decades.

And there are two that stand out among the others.

A natural gas-focused pipeline company

TC Energy (TSX:TRP)(NYSE:TRP) is a pipeline/midstream energy giant from Canada with an impressive asset base in the United States. The company has three main business segments: natural gas, liquids, and electricity. And it’s the natural gas segment that endorses the long-term potential of this energy giant.

The company controls a massive +93,000-kilometre network of natural gas pipelines in North America. It also has the largest storage capacity (about 653 cubic feet). And thanks to these assets, the company helps meet one-fourth of the natural gas demand of the continent.

Its liquids pipeline network is quite impressive as well but nowhere near on bar with the natural gas one. As for electricity, the company has a production capacity of about 4.3 GW — enough to power four million homes. And three-quarters of the power comes from emission-free sources.

The natural gas focus, which has a better chance of surviving in the greener future, is not the only reason TC is an ideal long-term energy investment. Its history is also a potent endorsement, especially its resilience after the 2015 crash.

An energy producer

If you lean more towards upstream energy companies, Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ) might be the right fit for you. It’s one of the largest energy producers in North America, focusing primarily on Western Canada. And while its oil production capacity is not very far from its natural gas one, the latter is relatively higher.

Its diverse portfolio of production resources and strong financials make it an interesting energy investment. It has also proven its worth as a resilient energy company in the 2015 crash, though the 2020 crash was quite hard, and the subsequent recovery has been insanely powerful. Yet the stock boasts a decent 3.9% yield and an undervaluation which is an unusual match to its current bullish phase.

Foolish takeaway

The energy bull market might be coming to an end, which means a correction is just on the horizon. That would be the perfect time to buy these two energy giants and hold on to them for decades. You will get the best of the dividends they offer as well as any long-term capital-appreciation potential these stocks might have.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends CDN NATURAL RES.

More on Energy Stocks

Arrowings ascending on a chalkboard
Energy Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Canadian Natural Resources stock is well set up to beat the TSX as it continues to generate strong cash flows…

Read more »

energy industry
Energy Stocks

2 TSX Energy Stocks to Buy Hand Over Fist Now

These two rallying TSX energy stocks can continue delivering robust returns to investors in the long term.

Read more »

green energy
Energy Stocks

1 Magnificent TSX Dividend Stock Down 37% to Buy and Hold Forever

This dividend stock has fallen significantly from poor results, but zoom in and there are some major improvements happening.

Read more »

oil tank at night
Energy Stocks

3 Energy Stocks Already Worth Your While

Here's why blue-chip TSX energy stocks such as Enbridge should be part of your equity portfolio in 2024.

Read more »

Solar panels and windmills
Energy Stocks

1 Beaten-Down Stock That Could Be the Best Bet in the TSX

This renewable energy stock could be one of the best buys you make this year, as the company starts to…

Read more »

Dice engraved with the words buy and sell
Energy Stocks

Is Enbridge Stock a Buy, Sell, or Hold?

Here's why Enbridge (TSX:ENB) remains a top dividend stock long-term investors may want to consider, despite current risks.

Read more »

Gas pipelines
Energy Stocks

If You Had Invested $5,000 in Enbridge Stock in 2018, This Is How Much You Would Have Today

Enbridge's high dividend yield hasn't made up for its dismal total returns.

Read more »

Bad apple with good apples
Energy Stocks

Avoid at All Costs: This Stock Is Portfolio Poison

A mid-cap stock commits to return more to shareholders, but some investors remember the suspension of dividends a few years…

Read more »