Insights

3 High-Yield Energy Stocks to Earn Passive Income From for Years

The energy industry has historically offered above-average dividend yields, making it ideal for those seeking to earn passive income. While the oil and gas industry is volatile, causing dividend payments in that sector to fluctuate wildly, other parts of the energy sector generate much steadier cash flow. That allows companies in those segments to pay a more sustainable dividend.

Three energy stocks that offer high-yielding dividends they should have no problem sustaining over the long term are Brookfield Renewable (NYSE: BEPC)(NYSE: BIP)Enbridge (NYSE: ENB), and Consolidated Edison (NYSE: ED). That makes them ideal options for those seeking to earn passive income.

Powerful dividend growth ahead

Brookfield Renewable operates a globally diversified renewable energy platform. It generates steady cash flow by selling the power it produces to utilities and large corporate buyers under long-term, fixed-rate power purchase agreements. Those contracts supply Brookfield with stable cash flow to support its dividend. The company currently offers a 3.4% dividend yield, more than double the 1.6% yield of an S&P 500 index fund. 

That high-yielding payout is on a very sustainable foundation. Brookfield has a reasonable dividend payout ratio, enabling it to retain cash to grow its business. Meanwhile, the company has a strong investment-grade balance sheet, providing additional financial flexibility.

Brookfield expects its cash flow to grow by 6% to 11% per share through at least 2026, powered by higher electricity prices and its extensive pipeline of renewable energy development projects. Meanwhile, it sees acquisitions adding up to another 9% to its bottom line each year. This outlook easily supports Brookfield’s view that it can grow its high-yielding dividend by 5% to 9% per year. That would continue to company’s trend of annual dividend increases, which hit the 11th consecutive year mark in 2022. 

The fuel to keep growing

Enbridge operates an extensive oil and gas pipeline network in North America, one of Canada’s largest natural gas utilities, and a renewable energy business. These businesses generate steady cash flow backed by long-term contracts and government-regulated rate structures. That helps support Enbridge’s dividend, which currently yields nearly 6%.

That big-time payout is on a solid footing. Enbridge has a fairly conservative dividend payout ratio and a rock-solid investment grade credit rating. That gives the company billions of dollars of annual investment capacity to continue expanding its operations.

Enbridge estimates it can grow its cash flow per share by a 5% to 7% compound annual rate through at least 2024. That should enable the company to continue increasing its dividend and extend a growth streak that currently stretches 27 straight years.

This elite track record isn’t showing any signs of stopping

Consolidated Edison is a utility that distributes electricity and natural gas to the New York City metro area. It also has a large-scale renewable energy business and investments in natural gas pipelines and electricity transmission lines. These businesses all produce steady cash flow to support the company’s dividend, which currently yields 3.3%.

The utility’s dividend is on solid ground. It maintains a targeted dividend payout ratio of 60% to 70% of its adjusted earnings, a healthy level for a utility. Meanwhile, it has a solid investment-grade balance sheet. Those features give Consolidated Edison the financial flexibility to continue expanding its operations. 

Consolidated Edison expects to invest $15.7 billion in a combination of green energy, safety, and reliability investments through 2024. These investments should enable the utility to continue growing its earnings. That should give it the power to keep growing the dividend. Consolidated Edison delivered its 48th straight year of increasing the dividend in 2022, the longest period of consecutive annual dividend increases of any utility in the S&P 500.

Great ways to energize your passive income

Brookfield Renewable, Enbridge, and Consolidated Edison offer investors high-yielding dividends. They also have excellent track records of steadily increasing those payouts. With more growth likely in the future, these high-yielding energy stocks are perfect options for those seeking sustainable passive income streams.

Matthew DiLallo has positions in Brookfield Infrastructure Partners, Brookfield Renewable Corporation, and Enbridge. The Motley Fool has positions in and recommends Brookfield Renewable Corporation and Enbridge. The Motley Fool recommends Brookfield Infra Partners LP Units and Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Rebate Rewards

Level 2 Rebate

Deposit $2,000 and get $200 Rebate
$ 200 Rebate
  • 3 Simple Steps
  • 1. Register Using The Link Below (Promo-Code: WEBREBATE)
  • 2. Deposit $2,000 and place one trade at any non-Austalian market within 30 calendar days
  • 3. Receive Your $200 Rebate
Popular

Level 1 Rebate

Deposit $1,000 and get $100 Rebate
$ 100 Rebate
  • 3 Simple Steps
  • 1. Register Using The Link Below (Promo-Code: WEBREBATE)
  • 2. Deposit $1,000 and place one trade at any non-Austalian market within 30 calendar days
  • 3. Receive Your $100 Rebate

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex Securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

EASY QUALIFICATION & LOW ENTRY
NEW CLIENT REBATE OFFER
EARN UP TO $200 CASH REBATE
Act Fast - Promotion Ends In
Click Here To Get Started
EASY QUALIFICATION & LOW ENTRY
NEW CLIENT REBATE OFFER
EARN UP TO $200 CASH REBATE
Act Fast - Promotion Ends In
Click Here For More Info