When considering an energy investment, two strong contenders on the Toronto Stock Exchange come to mind: Canadian Natural Resources (TSX:CNQ) and Brookfield Renewable Partners L.P. (TSX:BEP.UN). How should you choose when both stocks offer steady dividends and growth potential? Let's take a closer look at these two energy giants and help you decide which may be a better fit for your portfolio.

Canadian Natural Resources has a track record of strong returns

Canadian Natural Resources is one of Canada's largest and most diversified oil and gas producers. The company's performance has been stellar, with long-term investors seeing significant returns. Over the past decade, CNQ has delivered annualized returns of nearly 13%, transforming an initial $10,000 investment into around $33,818. If dividends were reinvested, that investment would have grown to about $42,560 – an impressive annualized return of 15.6%. Notably, dividend reinvestment is only beneficial if the stock price appreciates over time.

With its diversified production mix – approximately 27% natural gas, 28% heavy oil, 10% light oil and natural gas liquids, and 35% synthetic crude oil – CNQ's profits are closely tied to commodity prices. While this makes the stock more volatile, the company's commitment to returning value to shareholders has remained unwavering.

CNQ is a top energy stock with a strong history of dividend growth. The company has increased its dividend for about 23 consecutive years, boasting impressive dividend growth rates across various time frames. Its 3-, 5-, 10-, 15-, and 20-year dividend growth rates have all exceeded 20%. Most recently, in October, it raised its dividend by 12.5% year over year.

The stock recently pulled back by about 12% from its October peak, presenting a potential buy-the-dip opportunity for long-term investors who can tolerate volatility. Priced at $44.78 per share at writing, CNQ offers a 5% dividend yield based on its quarterly payout of $0.5625 per share. Analysts believe the stock is currently trading at a 20% discount, which could make it attractive for those seeking steady income and long-term growth.

Capitalize on the energy transition with Brookfield Renewable Partners

Then, there's Brookfield Renewable Partners specializing in renewable energy. It is poised to benefit from the global shift towards decarbonization and the increasing demand for sustainable energy. The company's diversified portfolio spans five continents, with assets in hydro, wind, solar, and distributed energy solutions. It has positioned itself as a leader in the renewable energy transition, projecting decades of growth and investment opportunities as global demand for clean energy continues to rise.

As of this year, Brookfield Renewable boasts an operating capacity of approximately 37 GW, with an impressive 200 GW of projected development capacity. This presents significant long-term growth potential, particularly in an era increasingly focused on digitalization and sustainability.

At the recent price of $33.90 per unit, Brookfield Renewable offers a higher 5.9% cash distribution yield compared to CNQ. While its growth rate is more modest – projected to be around 5% per year – its consistent cash distribution increases over the past 14 years make it a good consideration for income-seeking investors.

Which is a better investment?

Both Canadian Natural Resources and Brookfield Renewable Partners have strong investment potential, but they cater to different investor preferences. CNR offers a reliable, high-yielding dividend stock with impressive historical growth and a diversified portfolio in the energy sector. On the other hand, Brookfield Renewable offers long-term growth potential through its focus on clean energy and sustainability, with a steady dividend yield that's aligned with global energy transitions.

For investors seeking exposure to traditional energy with robust dividends, Canadian Natural Resources may be a better choice. However, if you're looking to capitalize on the renewable energy trend with consistent growth, Brookfield Renewable Partners could be a better fit.