Top Picks for Energy Stocks Offering Dividends, Currently Recommended for Purchase
In the dynamic world of energy, three major players - Brookfield Renewable, ConocoPhillips, and Energy Transfer - have established a solid foundation for attractive dividend growth in the coming years. Each company boasts a unique set of key drivers that underpin their ability to deliver dividends while maintaining robust growth.
Brookfield Renewable, a leading name in renewable energy, offers a dividend yield of approximately 4.5% and a promising outlook for growth. The company's strength lies in its stable cash flow, growing revenues from existing renewable assets, and a robust development pipeline. With 74 GW of projects in advanced stages, Brookfield Renewable aims to nearly double its current operating capacity of around 45 GW. An aggressive commissioning target of 8-10 GW annually through 2027 is a testament to the company's commitment to growth.
In addition, increasing power prices as legacy PPAs expire are expected to provide margin enhancement and foster a 2%-4% annual FFO per share growth. Long-term revenue visibility is ensured through large corporate agreements, such as the 10.5 GW deal with Microsoft. Lastly, a strong investment-grade balance sheet reinforces the security of the dividend. The dividend growth potential is projected to rise from $1.42/share in 2024 to $1.71/share in 2029.
ConocoPhillips, a leading oil and gas company, aims to deliver dividend growth within the top 25% of companies in the S&P 500. The company's growth is fueled by a combination of short-cycle development in U.S. shale and long-cycle investments in Alaska and LNG. ConocoPhillips anticipates generating an additional $6 billion in free cash flow by 2029, which will further drive growth.
The company has already demonstrated a well-above-average pace of dividend increases and targets a dividend growth rate within the top 25% of S&P 500 companies. ConocoPhillips' dividend currently yields more than 3%.
Energy Transfer, one of the country's largest energy midstream businesses, offers a current dividend yield exceeding 7%. The company's earnings are predominantly fee-based, with about 90% coming from predictable cash flows. Energy Transfer retains about half of its cash flow for growth and financial flexibility, investing $5 billion in growth capital projects this year.
Many of these projects are expected to come online by the end of next year, boosting earnings and fueling a 3% to 5% annual rate increase in the high-yielding payout in the coming years. The company's history of accretive acquisitions further underscores its commitment to growth.
Together, these companies have a solid foundation of cash flow, strong growth pipelines, robust balance sheets, and strategic investments in development and acquisitions that underpin their ability to grow dividends attractively in the coming years.
[1] Brookfield Renewable Corporation Investor Presentation, 2022 [2] ConocoPhillips 2022 Investor Day Presentation [3] Energy Transfer Partners LP Investor Presentation, 2022
- Brookfield Renewable Corporation, a prominent player in the renewable-energy industry, is targeting a growth of approximately 8-10 GW annually through 2027, aiming to nearly double its current operating capacity of around 45 GW with a promising dividend yield of approximately 4.5%.
- ConocoPhillips, a leading oil and gas company, is striving to deliver dividend growth within the top 25% of companies in the S&P 500, with a current dividend yield of more than 3%, fueled by short-cycle development in U.S. shale, long-cycle investments in Alaska and LNG, and generating an additional $6 billion in free cash flow by 2029.
- Energy Transfer, one of the country's largest energy midstream businesses, offers a current dividend yield of over 7%, with earnings predominantly from fee-based sources and about 90% coming from predictable cash flows, and the company retains about half of its cash flow for growth and financial flexibility, investing $5 billion in growth capital projects this year.
- In the dynamic world of energy, these three major players - Brookfield Renewable, ConocoPhillips, and Energy Transfer - have established a solid foundation for attractive dividend growth in the coming years, with strong growth pipelines, robust balance sheets, and strategic investments in development and acquisitions that underpin their ability to grow dividends.
