Top Energy Sector Stocks to Invest in for 2025

These energy giants deserve to be on your radar.

| More on:
oil pump jack under night sky

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Energy bulls are looking for top TSX energy stocks that pay good dividends and offer a shot at decent long-term total returns.

Oil and gas price outlook

Natural gas is trading near its high point for the year, while oil prices continue to face headwinds. Analysts expect the trend to continue into 2025.

International demand for Canadian and U.S. natural gas soared after the start of the war between Russia and Ukraine. Europe historically relied on natural gas from Russia to fuel its manufacturing and household energy needs. In an effort to secure reliable supplies, Europe and other international buyers are seeking out liquified natural gas (LNG) shipments from North American producers. The United States already has several LNG export facilities in operation. Canada is in the process of building new sites on the coast of British Columbia. Increased access to global markets should be positive for Canadian natural gas producers.

Domestic natural gas demand is also expected to be strong. Gas-fired power generation is forecast to grow due to rising electricity demand from new artificial intelligence data centres.

Oil’s outlook over the medium term is less positive. Weak demand from China is combining with growing supply from non-OPEC countries, including the United States and Canada. OPEC just announced it will delay a planned supply increase until next spring, citing the soft demand outlook. That being said, an escalation in the conflict in the Middle East could quickly send oil prices higher. For example, an attack by Israel on Iranian oil facilities or the blocking of the Strait of Hormuz by Iran would severely disrupt oil markets.

Given the market uncertainties, it makes sense for energy investors to look for companies that have diversified revenue streams and solid balance sheets to ride out volatility.

Suncor

Suncor (TSX:SU) is known for its oil sands production, but the company also owns refineries that turn crude oil into gasoline, diesel fuel, jet fuel, plastics, and asphalt. In addition, Suncor operates Petro-Canada retail locations. The downstream businesses, as the refineries and service stations are known, provide a good hedge against dips in oil prices that reduce margins on the production side of the business.

Suncor is making good progress on its turnaround efforts. Costs are down, production is growing, and the refineries are running at near capacity. The slowdown in the adoption of electric vehicles by consumers will prolong the need for gasoline and diesel fuel. Airlines are adding planes and routes, so jet fuel demand should remain robust.

Suncor recently raised its dividend by 5%. The stock is down from $58 a few weeks ago to about $44 at the time of writing.

Created with Highcharts 11.4.3Suncor Energy PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Investors who buy SU stock at the current level can get a dividend yield of 4.2%.

Canadian Natural Resources

Canadian Natural Resources (TSX:CNQ) is a major natural gas producer in Canada, along with being an oil giant. The company has production operations that span the hydrocarbon spectrum, including oil sands, conventional heavy oil, conventional light oil, offshore oil, natural gas liquids, and natural gas.

CNRL recently announced a US$6.5 billion deal to buy Chevron’s Alberta assets. The purchase will boost revenue and reserves. The anticipated cash flow growth should support the 7% dividend increase the board is giving shareholders for 2025.

Investors who buy CNQ stock at the current level can get a dividend yield of 4.9%. The share price is down about 7% in the past six months, so there is an opportunity to take advantage of a pullback.

The bottom line on energy stocks

In the current market conditions, it makes sense for energy investors to look for big names that pay solid dividends. If you are searching for energy stocks to add to your portfolio, Suncor and CNRL deserve to be on your radar.

Should you invest $1,000 in Bank of Nova Scotia right now?

Before you buy stock in Bank of Nova Scotia, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Bank of Nova Scotia wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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.

The Motley Fool recommends Canadian Natural Resources. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker has no position in any stock mentioned.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Energy Stocks

golden sunset in crude oil refinery with pipeline system
Energy Stocks

Is Enbridge Stock (TSX:ENB) a Buy for its 5.9% Dividend Yield?

This solid dividend payer has the potential to help investors generate reliable passive income for decades.

Read more »

nugget gold
Dividend Stocks

Recession Stocks Are Back: Consider Buying the Dip This April

Recession stocks are back, and this one could be a solid winner.

Read more »

Person holds banknotes of Canadian dollars
Energy Stocks

Best Stock to Buy Right Now: Suncor vs Cenovus?

Suncor stock's 4.2% dividend yield vs Cenovus Energy's growth potential: Tariff-proof safety or growth gamble?

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

How to Earn $500/Month in Tax-Free Income With Your TFSA

Canadians can earn $500 or a desired tax-free income every month by saving and investing through the TFSA.

Read more »

how to save money
Energy Stocks

1 Canadian Stock Ready to Surge in 2025 and Beyond

This Canadian stock has seen significant growth, but more could come for 2025 and beyond.

Read more »

oil and natural gas
Energy Stocks

Here’s How Many Shares of Enbridge You Should Own to Get $2,000 in Yearly Dividends

Solid dividend stocks like Enbridge could help you generate reliable passive income for decades.

Read more »

Pumpjack in Alberta Canada
Energy Stocks

3 Canadian Oil and Gas Stocks to Watch for in 2025

Oil companies like Suncor Energy (TSX:SU) are doing well this year.

Read more »

Aerial view of a wind farm
Energy Stocks

The Best Renewable Energy Stocks to Buy Before They Take Off

Here are two of the best Canadian renewable energy stocks you can buy today and hold for the long term…

Read more »