Dividend Investors: Top Canadian Energy Stocks for March 2024

Investors could consider top energy stocks like Enbridge for reliable dividend income.

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Top Canadian energy stocks are popular among investors seeking dividend income. The primary reason is that most energy companies have historically paid significant cash to their shareholders via dividends. 

Additionally, some of the top energy companies have consistently increased their dividends for years, enabling investors to earn a growing passive income. Against this backdrop, let’s look at top Canadian stocks from the energy sector that dividend investors could consider investing in in March 2024.

Enbridge 

Speaking of top dividend-paying energy stocks, investors could consider investing in Enbridge (TSX:ENB). The energy giant transports crude oil and gas. What stands out is that Enbridge has been uninterruptedly increasing its dividend for 29 years. Further, its dividend boasts a compound annual growth rate (CAGR) of 10% during the same period. Adding to the positives, Enbridge offers a dividend yield of 7.54% (calculated on its annualized dividend of $3.66 and its closing price of $48.57 on March 11). 

Enbridge’s diversified cash flows, high asset utilization rate, investments in conventional and green energy projects, power purchase agreements, and regulated cost-of-service tolling frameworks position it well to generate solid distributable cash flow (DCF) per share. This will enable it to cover its future payouts. 

Notably, the company’s leadership remains optimistic about future payouts. Enbridge’s management expects the DCF per share to increase by 3% annually through 2026 and about 5% afterward. This will help the company grow its dividend at a healthy pace in the coming years. 

Canadian Natural Resources

Within the energy space, investors could consider investing in the shares of Canadian Natural Resources (TSX:CNQ) in March 2024. This oil and natural gas company has a stellar dividend payment and growth history. Additionally, the energy company has been growing its dividend at a very high rate.  

Investors should note that Canadian Natural Resources has increased its dividend every year for 24 years. Moroever, its dividend grew at an impressive CAGR of 21% during the same period. Besides offering steady dividend income, CNQ stock delivered solid capital gains. Notably, Canadian Natural Resources stock has appreciated by over 259% in five years, delivering an average annualized return of about 29%. 

Looking ahead, Canadian Natural Resources’s diversified and long-life assets, high-value reserves, focus on cost control, and low debt-to-adjusted funds flow ratio position it well to generate strong earnings, which will support its future payouts. It pays a quarterly dividend of $1.05 per share, reflecting a yield of 4.32%. 

Brookfield Renewable Partners?

Investors could consider adding shares of renewable energy company Brookfield Renewable Partners (TSX:BEP.UN) for dividend income. It’s worth noting that the company’s funds from operations (FFO) increased at a CAGR of 10% between 2012 and 2023, helping Brookfield Renewable Partners expand its dividend at a CAGR of 6% during the same period.

The ongoing transition towards green energy, Brookfield Renewable Partners’s diversified asset base, and strong developmental pipeline position it well to generate solid FFO, which will drive its payouts. Further, long-term power purchase agreements and a focus on cost reduction will cushion its cash flows and cover its payouts. 

The company expects to grow its dividend by 5 to 9% annually. Moreover, it offers a yield of 5.93%.

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 Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Renewable Partners, Canadian Natural Resources, and Enbridge. The Motley Fool has a disclosure policy.

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