Building a diversified portfolio is one of the most important factors to successful long-term investing, and owning stocks in the energy sector is one of the most important industries to consider. Luckily for investors, even in this environment with so many stocks trading at a discount, there are plenty of top energy stocks to buy today.
Energy is one of the best industries to invest in for the long haul due to its massive importance to the global economy. Without energy, we have no transportation, no manufacturing, no health care. And given the consistently growing world population and GDP, the demand for energy is constantly growing.
This consistent growth in demand, in addition to the essential nature of energy, are two of the biggest reasons why energy stocks can be such excellent investments.
It’s important to note, though, that energy prices and, therefore, many energy stocks can sometimes be considerably volatile. So it’s essential to find the highest-quality stocks in the sector when they trade undervalued and buy and hold for the long run.
So, with that in mind, if you’re looking for some of the top energy stocks on the TSX to buy for your portfolio, here are two of the best picks to consider today.
One of the top energy stocks on the TSX to buy for dividend income
Buying stocks that produce energy is often a popular choice for investors with a higher risk tolerance due to the volatility of these stocks. As oil and gas prices rise, these companies can see enormous gains in their stock prices. However, they can also fall substantially as energy prices decline.
That’s why, for investors who are more risk averse or those looking to earn significant dividend income, Enbridge (TSX:ENB) is one of the top energy stocks to buy on the TSX.
Enbridge is an ideal stock because it’s a massive $97 billion energy infrastructure stock. Its main operations consist of transporting and delivering oil and natural gas. As a massive and well-diversified business, though, it does much more than that.
Enbridge also has energy storage operations, owns a gas utility business, and has a rapidly growing green energy portfolio.
While the stock can still experience volatility, its cash flow is much more stable and predictable than an energy producer, which is why it’s one of the top dividend stocks in the sector to buy now.
In addition, the pipeline industry has significant barriers to entry, which gives Enbridge an impressive competitive advantage and is one of the main reasons why it can consistently expand its operations, and consequently increase its dividend every year.
In fact, Enbridge’s annual dividend growth streak is now over a quarter century, and with the stock trading off its highs, its dividend now offers an impressive yield just shy of 7.8%.
Plus, the annual dividend of $3.55 looks ultra-safe, considering that Enbridge’s guidance for distributable cash flow per share in 2023 is $5.25–$5.65.
So if you’re looking for a top TSX energy stock to buy now, Enbridge is certainly one of the best there is.
A top green energy business to own for the long haul
In addition to Enbridge, another top TSX energy stock to buy today, especially given the long-term potential of green energy, is Brookfield Renewable Partners (TSX:BEP.UN).
Green energy has significant long-term growth potential as governments and businesses around the world continue to transition to cleaner energy and attempt to slow down climate change. Even Enbridge has recognized this and continues to expand its own green energy segment each year.
Brookfield is an ideal investment, too, because it’s a massive business with assets diversified all over the world. In total, it has assets on five continents including hydro, wind, solar and distributed energy operations.
The growth of renewable energy alone makes the sector attractive. However, in addition Brookfield is also constantly recycling capital and investing in new opportunities. Therefore, the stock targets 12%–15% total returns each year and 5%–9% annual distribution growth. Plus, it, too, offers an attractive yield, currently at 6.1%.
So, if you’re looking for a top energy stock to buy now and hold for years, Brookfield Renewables is one you’ll certainly want to consider.