Canadian investors seeking exposure to top energy stocks could consider buying Enbridge (TSX: ENB), Canadian Natural Resources (TSX: CNQ), and Brookfield Renewable Partners (TSX: BEP.UN). These companies have a solid business model and growing cash flows to support higher dividend payments and share prices. Let’s delve deeper.
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Enbridge
Enbridge is a compelling bet for Canadian investors in the energy sector. Enbridge is North America’s leading energy infrastructure company with an extensive liquids pipeline network connecting major demand and supply zones.
The company’s diversified revenue streams, extensive pipeline network, high asset utilization, long-term contracts, power-purchase agreements, and regulated tolling frameworks enable it to consistently grow its earnings and distributable cash flow (DCF). Higher DCF per share helps Enbridge pay higher dividends regardless of economic and commodity cycles.
Notably, this energy infrastructure giant has uninterruptedly paid dividends for about 69 years and increased them for 29 years, making it one of the top dividend-paying stocks in Canada. Moreover, its dividend grew at a compound annual growth rate (CAGR) of 10% during the same period, which is higher than its peers. Besides growing dividends, Enbridge stock offers a high yield of 6.5%.
Enbridge could continue to reward its shareholders with higher dividends in the future, thanks to its growing DCF per share. The company expects its earnings per share and DCF to grow at a mid-single-digit rate over the long term, which will help the company increase its dividend by a low- to mid-single-digit rate. Further, its multi-billion capital projects and strategic acquisitions will accelerate its growth and drive its share price.
Canadian Natural Resources
Canadian Natural Resources is a leading oil and gas producer. The company is famous for growing its dividend at a solid pace. Further, its stock has delivered above-average returns over the past five years. Its solid dividend payments and ability to deliver stellar capital gains make it an attractive investment in the Canadian energy space.
Canadian Natural Resources has raised its dividend at a CAGR of 21% in the last 25 years. Moreover, its stock price has gained over 271% in the last five years.
Canadian Natural Resources benefits from a diversified portfolio that balances risk across commodity cycles. With long-life, low-decline assets, it maintains stable production that drives earnings, even amid challenges.
Additionally, the energy company’s efficient operations and low reserve replacement costs contribute to solid earnings and cash flow. Further, its large inventory of low-capital-intensive projects and extensive undeveloped land holdings provide ample opportunities for long-term growth.
Brookfield Renewable Partners
Brookfield Renewable Partners stock offers exposure to the growing renewable energy sector. It is one of the world’s largest owners and operators of clean energy assets. Brookfield’s large operating fleet and expansive development pipeline of renewable power generating facilities position it well to capitalize on the global push toward sustainable and green energy sources.
Brookfield’s highly diversified renewable assets generate steady cash flow. The company’s long-term contracts, many of which are indexed to inflation, provide an additional layer of stability. Moreover, Brookfield’s strategic acquisitions and investments in innovative solutions like battery energy storage enhance its growth prospects and align with the increasing demand for energy storage solutions as renewable energy adoption expands.
With its substantial installed capacity and a significant development pipeline, Brookfield is well-positioned to deliver consistent fund flows. This will enable the company to enhance shareholder value through increased dividend distributions. In fact, Brookfield aims to grow its dividend by 5% to 9% annually, which makes it a compelling bet for income investors.
