One of the best-performing dividend stocks of the last year has been Tourmaline Oil (TSX: TOU), an energy stock that develops and explores for oil in Western Canada. But before investors pick up Tourmaline stock for its high returns and dividend yield, there’s another I would consider instead.
What’s happening with Tourmaline stock?
Before I get into this other stock, let’s look at why investors are picking up Tourmaline stock in the first place. The dividend stock is quite new on the energy stage but has made quite a name for itself. The company pumped out production, seeing soaring results in 2022 and 2023.
This sent shares up 170% from September 2021 until October 2022, before they started to drop. Shares plunged until March 2023, down by 35% during that time. While results were strong, an accounting error caused shares to plunge during that period.
However, since hitting lows in March, shares are back up by 30%, leading investors to want back in on this dividend stock. After all, it still trades at a valuable 5.84 times earnings, holding a 1.5% dividend yield, and recently reported strong results. But, honestly, I would look elsewhere.
Don’t get on a bandwagon
In any investment scenario, one of the worst things investors can do is hop on a bandwagon after it’s already left the station. You’ll mainly continue to try and play catch up to a share price that isn’t about to soar the way it has in the past.
Yet in the case of energy companies in the oil and gas industry, the scenario is even worse. These companies that are trying to focus on oil and gas are investing in a dying industry. What’s more, there are still many like Tourmaline stock that aren’t diversifying into new areas of renewable energy.
Because of this, I would look to companies that are diversified in the energy industry. It doesn’t have to be a stock that’s completely focused on this future. But it should at least be one that’s aware of the shift.
Consider Brookfield Infrastructure
That’s why a great investment option these days is Brookfield Infrastructure Partners (TSX: BIP.UN). Brookfield stock invests in the infrastructure the world needs on a regular basis. This includes oil and gas infrastructure but also renewable energy resources. Even beyond that, it includes telecommunications and even data business.
This provides Canadians with a very stable and diversified source of returns. One that can shift with the changes of the future but still offers stability through long-term contracts. What’s more, Brookfield stock offers a 4.69% dividend yield as of writing and is down 21% in the last year. This should give investors a boost as the company eventually recovers.
Now is the time to get greedy over a stock like Brookfield stock. It has had a hard year because of rising interest rates and costs from inflation. However, that’s the perfect time to buy. It’s a value stock that’s due to rise as the world’s pricing index stabilizes. And when that happens, Brookfield stock should slowly but surely climb to new heights. And with a dividend yield and history that far outweighs Tourmaline stock, it’s one I would certainly consider today.
