Buying and holding high-quality, blue-chip stocks is an excellent strategy for Canadian investors to generate long-term wealth growth. Companies with high market capitalizations, strong fundamentals, a wide economic moat, and the ability to generate substantial cash flows are typically excellent investments.
Several blue-chip stocks also pay investors juicy dividend yields. While they might not deliver rapid capital gains as many growth stocks, these top-notch stocks offer more stability and reliability. You can find such stocks across multiple segments of the Canadian economy, and the energy sector boasts some of the biggest names you can consider as blue-chip stocks to invest in.
Today, we will take a closer look at two Canadian energy stocks trading at favourable rates and boasting high-yielding dividends.
Suncor Energy (TSX:SU) is a $51.43 billion market capitalization integrated energy company. Headquartered in Calgary, Suncor stock specializes in producing synthetic crude oil through its oil sands operations. Higher oil prices favour oil producers like Suncor, allowing it to sell crude oil at higher prices to enjoy windfall gains.
After delivering two whole years of positive returns, its shares have declined this year. As of this writing, Suncor Energy stock trades for $39.35 per share, down by 4.68% year to date. At current levels, it boasts a juicy 5.29% dividend yield.
Despite the recent downturn, it might not be a bad investment to consider. Its revenue has grown by 82% in the five years between 2017 and 2022, with its adjusted annual earnings increasing over threefold in that time.
Boasting a strong balance sheet and wide economic moat, this dividend-paying stock can be a solid way to gain exposure to the energy industry.
Enbridge (TSX:ENB) is another major player in the Canadian energy industry to consider adding to your portfolio. Boasting a $101.39 billion market capitalization, Enbridge is a Calgary-based multinational pipeline and energy company.
Enbridge effectively serves other energy companies, providing them with the necessary infrastructure to transport energy products in North America. Boasting an extensive pipeline network and energy storage assets in the region, it plays a significant role in its economy.
Since its income is based on the volume it transports, not commodity prices, it can generate more stable revenue than several other energy companies. Backed by long-term contracts in a regulated industry, its commodity price immunity makes it a lower-risk business. As it increases investments in renewable energy assets, Enbridge is also repositioning itself for a greener future.
As of this writing, Enbridge stock trades for $50.18 per share, boasting a juicy 7.07% dividend yield.
With oil and gas extraction contributing 7.6% towards Canada’s 2022 gross domestic product (GDP), the traditional energy sector still has a lot to give to investors. There is the risk of a downturn if the Bank of Canada raises interest rates on June 7. However, there is more upside potential on account of OPEC countries reducing output in May, increasing the demand for Canadian energy products.
Enbridge stock and Suncor stock are among the biggest plays in the Canadian energy sector. While not without risks, these two TSX energy giants can be excellent investments to consider at current levels.