NPI:CC - The Best Canadian Energy Stocks to Buy for Dividends
2023-09-23 12:00:00 ET
The energy sector as a whole has been a mixed bag for Canadian investors over the past couple of years. One of the few common themes across the sector has been volatility .
It’s been a wild ride for energy investors since the early days of the pandemic. But now, with discounted stock prices and sky-high yields on the TSX, it could be an incredibly opportunistic time for long-term investors to put money into energy stocks.
Now’s the time to load up on renewable energy stocks
The renewable energy sector initially surged following the COVID-19 market crash in 2020. After finishing that year with no shortage of bullish momentum, it’s been mostly downhill for renewable energy stocks across the TSX.
In the short term, investors understandably may not have a ton of interest in the beaten-down renewable energy sector. Those with a long-term time horizon, though, may want to give it some serious thought.
The top renewable energy stocks in Canada are no strangers to delivering market-beating returns. And with share prices as low as they are today, there could be a serious long-term value opportunity here.
Not only are there cheap stock prices to take advantage of, but high yields, too. The drop in share prices has sent yields soaring for renewable energy stocks, adding another good reason to be a buyer today.
I’ve reviewed two discounted renewable energy stocks that are both currently yielding more than 5%. With the two companies also having a history of delivering market-beating returns, what’s there not to like about the two picks?
Energy stock #1: Brookfield Renewable Partners
As a global leader in the space, Brookfield Renewable Partners ( TSX:BEP.UN ) would be my go-to if I could own only one renewable energy stock. It’s also one of the reasons why I’ve been consistently adding to my position while the stock has been on the decline over the past two years.
Shares are just about flat on the year but are down close to 40% from all-time highs set in early 2021. Still, Brookfield Renewable Partners has more than doubled the returns of the S&P/TSX Composite Index over the past five years. And that’s not even including dividends, either.
At today’s stock price, Brookfield Renewable Partners’s dividend is yielding just over 5%.
Energy stock #2: Northland Power
Renewable energy investors looking for a lesser-known Canadian pick may be interested in Northland Power ( TSX:NPI ).
At a 5% dividend yield, passive-income investors won’t see much of a difference versus Brookfield Renewable Partners. It’s the value investors that won’t want to miss this buying opportunity.
Shares are nearing a 60% loss from all-time highs set in early 2021. Excluding dividends, the stock is barely positive over the last five years, underperforming the broader market’s returns. Looking at the five-year chart, you can certainly make the argument that Northland Power’s stock price got a tad ahead of itself.
Volatility aside, though, the long-term market opportunity for Northland Power remains firmly intact.
It may take some time for the stock to return to new highs, but there’s a long enough track record to have faith in the company. And in the meantime, a 5% dividend yield is higher than most on the TSX.
The post The Best Canadian Energy Stocks to Buy for Dividends appeared first on The Motley Fool Canada .
Fool contributor Nicholas Dobroruka has positions in Brookfield Renewable Partners. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy .
2023