The energy sector currently accounts for a significant 20.3% of the S&P/TSX Composite Index. This means that investors who are looking for exposure to the Canadian economy and its growth potential should not ignore this important sector. Moreover, most energy stocks tend to offer sustainable dividends that can provide a steady income stream for long-term investors.
In this article, I’ll highlight two top energy stocks you can buy now and hold as long as you want. Both of these stocks have strong fundamentals, solid long-term growth prospects, and generous dividends.
Keyera stock
Keyera (TSX: KEY) could be a great stock to bet on for investors looking for exposure to the Canadian energy sector. While this energy company doesn’t produce oil and gas, it provides essential services for the transportation, storage, and processing of natural gas liquids. For over two decades, the company has been operating an extensive network of pipelines, plants, terminals, and hubs across western Canada, which serves both producers and customers in the energy industry.
KEY stock currently has a market cap of $7.9 billion, as it trades at $34.68 per share with 8.3% year-to-date gains. At this market price, it offers a 5.8% annualized dividend yield.
Last year, Keyera’s revenue remained nearly flat on a YoY (year-over-year) basis at $7.1 billion. Nonetheless, its adjusted annual earnings jumped 25% YoY to $ 1.85 per share, thanks to positive contributions from all its business segments, including marketing, liquid infrastructure, and gathering and processing. During the year, the company’s annual distributable cash flow reached $855 million, or $3.73 per share, significantly higher than the previous year’s $654 million, or $2.95 per share.
Keyera’s KAPS pipeline system continues to accelerate its growth prospects by providing essential transportation solutions and attracting significant long-term customer commitments. In 2023, KAPS added approximately 30,000 barrels per day of new long-term commitments, reflecting strong market confidence in Keyera’s offerings. The company’s long-term outlook remains bullish with expansions at Keyera Fort Saskatchewan and the potential KAPS Zone 4 expansion, making it an attractive, dividend-paying energy stock to hold for the long term.
Crescent Point Energy stock
Crescent Point Energy (TSX:CPG), which is likely to change its name to “Veren” after getting shareholders’ approval later this month, could be another trustworthy energy stock to buy for the long term. This Calgary-headquartered company has a market cap of $7.2 billion as its stock trades at $11.70 per share after rallying by 27.3% year to date. It has a modest annualized dividend yield of 3.9% at the current market price.
In 2023, Crescent Point generated a robust $980 million in excess cash flow, reflecting the underlying strength in its operations and strong market positioning. Interestingly, the company returned approximately $600 million of this excess cash flow to its shareholders in 2023 through dividends and share buybacks as it remains committed to shareholder returns.
Crescent Point expects its average daily production to increase significantly in 2024, which should help it continue generating solid excess cash flow. Moreover, its strategic asset base and focus on operational efficiencies make this energy stock really appealing for long-term dividend investors.
