Income-seeking investors can look to acquire quality dividend stocks to earn a stable, passive income in a low-interest-rate environment. Due to their regular payouts, these companies are also less prone to market volatility, thereby providing stability to your portfolio. Notably, dividend-paying stocks have historically outperformed non-dividend-paying stocks. Against this backdrop, let’s look at two top energy stocks that you should buy to earn passive income for decades.
Enbridge
Enbridge (TSX:ENB) is an excellent buy for income-seeking investors due to its stable cash flows from regulated businesses, consistent dividend growth, and high yield. The Calgary-based energy infrastructure company transports oil and natural gas across North America through a tolling framework and long-term take-or-pay contracts. Besides, its low-risk utility assets and 37 power purchase agreement-backed renewable energy assets shield its financials from commodity price fluctuations and macroeconomic cycles.
Therefore, the company generates stable and predictable cash flows, enabling it to pay and raise its dividends consistently. ENB stock has paid dividends uninterruptedly for 70 consecutive years and has also raised them at an annualized rate of 9% since 1995. It currently offers an attractive forward dividend yield of 6%.
Moreover, Enbridge has identified $50 billion of growth opportunities across its four segments. Amid these growth opportunities, the company has planned to invest $9–10 billion annually, expanding its asset base. Considering these growth prospects, Enbridge’s management hopes to increase its dividends annually by 3% until 2026 and 5% thereafter.
Additionally, the company’s financial position appears healthy, with its liquidity standing at $13.4 billion as of the end of its first quarter. Furthermore, the company’s management also expects its debt-to-EBITDA ratio (earnings before interest, taxes, depreciation, and amortization) to improve in the coming quarters, driven by the increased contribution from its recent acquisitions. Considering all these factors, I believe Enbridge would continue to pay dividends at a healthier rate.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is another energy stock that I believe would be ideal for income-seeking investors due to its diversified and balanced asset base and consistent dividend payouts. The company operates large, low-risk, and high-value reserves that require lower capital reinvestment requirements. Additionally, due to its effective and efficient operations, the energy producer enjoys a lowered breakeven WTI (West Texas Intermediate) crude price, thus delivering healthy financial performance and solid cash flows. Supported by these solid cash flows, CNQ has increased its dividends at an annualized rate of 21% over the past 25 years, while its forward dividend yield stands at 5.1%.
Moreover, CNQ plans to invest approximately $6 billion this year to enhance its oil and natural gas production capabilities. Meanwhile, management anticipates its total average production to be between 1,510 and 1,555 BOE/d (barrels of oil equivalent per day) in 2025, with the midpoint of the guidance representing a 12.5% increase from the previous year. Given its liquidity of $5.1 billion as of March 31, the company is well-equipped to fund its growth initiatives. It has also strengthened its financial position by lowering its leverage by $1.4 billion in the first quarter. Notably, CNQ stock also trades at a reasonable valuation, with its next 12 months (NTM) price-to-earnings multiple at 14.8.
Considering all these factors, I believe CNQ can continue to pay dividends at attractive rates, making it an enticing investment for income-seeking investors.
