Dividends for Less: 2 Energy Stocks to Power Your Passive Income

Suncor Energy (TSX:SU) and TC Energy (TSX:TRP) are great high-yield value stocks for dividend investors to watch in May.

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Last year, it was all about the energy sector’s relative outperformance. This year, it’s about the return of tech. As the S&P 500 looks to enter a new bull market, I think it’d be wise to stay diversified, so you’re ready to benefit from a “broadening out” of the market rally off October’s lows.

In this piece, we’ll give two intriguing dividend stocks a glance. Such names will continue to compensate investors for their time, regardless of which direction markets head next.

At the end of the day, it’s cash dividends that should give you the incentive to stay invested through turbulent times. So, the next time you hear someone say, “Sell in May and go away,” you can tell them, “No way!”

Without further ado, consider Suncor Energy (TSX:SU) and TC Energy (TSX:TRP), two TSX energy stocks that have suffered steep pullbacks in recent months.

Suncor Energy

Suncor Energy stock is up just north of 1% year to date. Down around 21% from its 2022 peak, I think those lacking in energy exposure may wish to top up before oil has a chance to enjoy another leg higher. Undoubtedly, recessions tend to take a bite out of global oil demand. However, a recession isn’t a certainty this time around. Further, OPEC-led production cuts could easily make US$100 per-barrel oil a possibility.

In any case, I don’t think Canadian investors are giving Suncor the attention it deserves given its position in the oil patch. Over the next year, I’d look for the firm to improve upon its operations and safety track record. As the firm improves upon its shortcomings while taking advantage of opportunities in the space, I find it absurd that shares trade at such a relative discount to its peers. At 6.4 times trailing price to earnings (P/E), with a 4.9% dividend yield, Suncor stands out as value hiding in plain sight.

Suncor recently agreed to buy TotalEnergies’s Canadian oil sands assets for $6.1 billion. That’s a big deal at a very reasonable price. Shares shot up higher to end the week. I think there’s more room to run!

Buckle your seatbelts, though, as shares boast a 1.67 beta, meaning the stock is likelier to be less of a smooth ride than the broader market.

TC Energy

TC Energy is an oil and gas pipeline company that doesn’t get as much respect as its yield-heavy peers. With a 6.61% yield, TRP stock’s dividend is very bountiful. The firm is ready to move on from Keystone, with a compelling Coastal Gaslink gas pipeline in British Columbia. When it comes to such projects, regulator hurdles and cost issues tend to be major question marks.

The project is expected to be a tad pricier than prior estimates. The price tag had many investors hitting the sell button in the back half of last year. Undoubtedly, the selling pressure seems overdone. You’re getting a solid cash cow with a solid growth pipeline (sorry for the pun) that could help fuel annual dividend hikes.

The Foolish bottom line

TC and Suncor are great energy bargains with sweet yields. As energy stocks cool off after a hot year, long-term thinkers would be wise to put a few on their watchlist going into year’s end.

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 Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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