There’s no question that TSX energy stocks have had a strong run recently as tensions in Iran pushed oil prices higher. However, with ceasefire optimism now causing oil prices to start pulling back, many Canadian energy stocks have followed.
That kind of volatility can make investors uneasy in the short term, but for long-term investors, it can also create opportunities.
Because the conflict in Iran didn’t just move energy prices for a few months. It also reinforced how sensitive global supply is to geopolitical instability in the Middle East, and just how quickly disruptions can impact the entire global economy.
So, while TSX energy stocks are starting to pull back, the bigger picture hasn’t changed. If anything, the long-term importance of having a stable global energy supply has only become clearer.
At the same time, Canada continues to invest heavily in expanding export infrastructure and diversifying where its energy products are sold, particularly toward global markets like Asia.
So, with years of long-term growth potential still ahead of the sector, and with stocks now retreating on ceasefire news, this could be an attractive opportunity for investors looking to lock in high-quality energy stocks. Here are five of the best to consider.
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Three TSX energy stocks to buy and hold long term
When it comes to buying energy stocks for the long haul, the focus should always be on businesses that can generate strong cash flow through different parts of the cycle, which is why Canadian Natural Resources (TSX: CNQ) is always a top pick.
It’s one of the largest and most diversified producers in Canada, with a strong mix of assets and a reputation for operating efficiently. Its low-cost operations and integrated model help it remain profitable even when oil prices fluctuate.
Another top pick is Suncor Energy (TSX: SU), which is intriguing for its integrated business model that includes both production and refining operations, which can help provide additional stability. When oil prices fall, refining margins can often help offset some of that pressure.
That balance makes Suncor less dependent on a single part of the energy value chain, which can be especially valuable during periods of uncertainty.
Then there’s Freehold Royalties (TSX: FRU), which offers exposure to the energy sector in a completely different way.
Instead of producing energy directly, Freehold owns royalty interests and collects a portion of the revenue from the production of other companies. That means it benefits from energy production without taking on the same level of operating costs or drilling risk as traditional producers.
That business model can be particularly appealing for dividend investors because it allows the TSX energy stock to offer an attractive yield, currently 6.1%, due to its relatively lower-cost structure.
Two top energy infrastructure companies offering additional stability
While producers tend to get most of the attention when oil prices move, energy infrastructure businesses can offer a more stable way to invest in the sector. In fact, one of the most popular dividend stocks among Canadian investors is Enbridge (TSX: ENB).
Enbridge operates one of the largest energy infrastructure networks in North America, moving oil and natural gas across the continent.
That’s what makes the business so attractive. It generates steady, recurring revenue that’s far less sensitive to commodity prices compared to producers.
However, it’s not just about stability. Enbridge also has significant long-term growth potential.
It continues investing in renewable energy, and as Canada looks to expand export capacity and diversify away from the U.S., Enbridge is one of the best-positioned companies to benefit from that shift.
Lastly, AltaGas (TSX: ALA) is another top TSX infrastructure stock in the energy space that offers a similar combination of stability and growth potential.
The company combines utility operations with midstream infrastructure, creating a more balanced business model. For example, its utility segment provides steady, defensive cash flow, while its midstream and export-related operations offer exposure to long-term growth.
That includes increasing demand for LNG and energy exports, especially as Canada continues expanding its role in global energy markets.
And it’s that combination that allows AltaGas to benefit from long-term energy demand while still generating reliable and predictable cash flow, which is why it’s one of the best TSX energy stocks to buy right now.
