Investing in quality dividend stocks is an excellent strategy to earn a stable passive income in this falling interest rate environment. Also, these companies are less prone to market volatility due to their healthy cash flows and consistent dividend payouts. Against this backdrop, let’s explore three top energy stocks that could help you earn a stable, passive income.
Enbridge
Given its consistent dividend growth for 30 years and a high dividend yield of 6.3%, Enbridge (TSX:ENB) would be my first pick. The midstream energy company transports oil and natural gas across North America through a tolling framework and long-term take-or-pay contracts. Besides, its PPAs (power purchase agreements)-backed renewable energy assets and low-risk utility businesses stabilize its financials, irrespective of the broader market conditions. These healthy financials and cash flows have allowed the Calgary-based energy company to pay dividends uninterruptedly for 70 years.
Moreover, Enbridge expanded its natural gas utility assets by acquiring three facilities in the United States for $19 billion last year. These acquisitions could further improve its cash flows. Also, the contributions from these acquisitions could bring its debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) down in the coming quarters. Besides, the management hopes to put around $23 billion of assets into service over the next three years, expanding its asset base. Amid these growth initiatives, the company expects its EBITDA to grow 7–9% annually through 2026 and 5% after that. Besides, its valuation looks reasonable, with its NTM (next 12 months) price-to-earnings multiple of 19.7.
Fortis
Another top energy stock that income-seeking investors can buy is Fortis (TSX:FTS), which meets the electric and natural gas needs of 3.5 million customers. With 99% regulated assets and 93% involved in low-risk transmission and distribution business, it enjoys healthy and stable financials, irrespective of macroeconomic fluctuations. The company has delivered an average total shareholder return of 10.3% for the previous 20 years. ENB has raised its dividends uninterruptedly for 51 years and currently offers a healthy dividend yield of 3.8%.
Moreover, Fortis continues to expand its rate base with its $26 billion capital investment plan. These investments could drive its rate base at an annualized rate of 6.5% from 2025 to 2029. Further, falling interest rates could benefit the company due to its capital-intensive business. Also, favourable rate revisions and improved operating performances could drive its financials in the coming years. Considering these growth initiatives, Fortis’s management expects to raise its dividends by 4–6% annually through 2029, making it an impressive buy for income-seeking investors.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is an oil and natural gas-producing company that has raised its dividends for the last 25 years at an annualized rate of 21%. It operates a diverse, balanced asset base with lower capital reinvestment requirements, thus enjoying healthy cash flows that facilitate its consistent dividend growth. Also, CNQ’s forward dividend yield stands at a healthy 6% as of the April 13 closing price. The company’s financial position also looks healthy, with its debt-to-adjusted EBITDA at 1.1 at the end of 2024.
Moreover, CNQ has planned to invest around $6.2 billion this year, strengthening its production capacity. The management expects to drill 279 crude oil wells and 361 conventional exploration and production wells this year. Also, its continued oil sand mining and upgradation could boost its production this year. The company’s management expects its 2025 total average production to come between 1,510 and 1,555 thousand barrels of oil equivalent per day, with the midpoint representing 4.2% year-over-year growth. Considering its healthy cash flows and these growth initiatives, I expect CNQ to continue rewarding its shareholders with healthy dividend yields.
