It has been an exciting time for investors in Suncor (TSX:SU). After troubling times with Suncor stock slashing its dividend in two, the company is back. Its dividend doubled back in 2021, and has continued to grow since then. Suncor shareholders can now bring in a dividend yield at 4.88% as of writing, which comes to $2.08 per share annually.
Yet, while Suncor stock is doing well now, it’s hard to ignore the past, especially if we consider the future. That is why I’d recommend a different dividend heavyweight instead.
Large, but not in charge
While Suncor stock may be large, which is often what you need for dividend stability, it’s not in charge of one thing: oil prices. They have contributed to so much volatility to the company’s share price and overall performance in the last few years. And frankly, it’s only going to get worse.
Even the Organization of Petroleum Exporting Countries (OPEC+) stated that by 2040, there will be a massive decrease in overall oil and gas use. Nations that used to depend on the product are making a massive switch over to renewable energy. And this trend was hurried along last year.
When Russia invaded Ukraine, many European countries sought out ways to come out from under the thumb of Russian oil. Having an outside source negotiate your power needs is simply unappealing. So European countries have made major headway in investing in renewable power at home.
What does this have to do with Suncor stock? It shows times are changing, and Suncor stock simply doesn’t have the means to make an easy shift. It made purchases in years past that it simply paid too much for. While the integrated energy producer continues to put billions towards reducing debt, as of its latest earnings report, it still has $13.6 billion in debt to pay over time.
Simply not a strong long-term hold
With so much change, Suncor stock is simply not the long-term hold it once was. SU has shown that volatility in the markets could cause the stock to sink, and its dividend to be slashed at a moment’s notice. This is not the strong company it once was with so much change on the way.
Therefore, it’s a great time to consider the new option. That comes down to what’s going to be the future of investment opportunities. If you were to invest in oil and gas 100 years ago, you would be laughing 50 years later. And that could certainly be the case for renewable energy companies today.
Yet, while there are a lot to consider, I would definitely get in on another company that’s also been around for over 100 years. That’s Brookfield Renewable Partners LP (TSX:BEP.UN).
Dividends that will last
While Brookfield Renewable stock hasn’t been around 100 years, its parent company Brookfield Corporation has. The company was founded back in 1899, and even started with renewable assets in Guatemala. It’s now 124 years later, and the company has diversified and supported growth in numerous areas.
Brookfield Renewable stock is one of these areas. The company has traded on the TSX for the last two decades. And it has so much room to run, as acquisitions and partnerships have boosted the stock 15% year to date, though it’s still down 17% in the last year.
Therefore, it’s a great time to pick up a company that’s going to be involved in the future of energy production. BEP.UN has a dividend yield of 4.45%, along with capital growth on the way. So, it’s certainly the dividend stock I would consider over Suncor stock on the TSX today.