Dividend investors could consider adding the top Canadian energy stocks for regular passive income. These companies are renowned for their solid dividend payments and growth history, making them reliable investments that generate steady income in all market conditions.
With this background, here are the top energy stocks for December.
Energy stock #1
Enbridge (TSX:ENB) is a no-brainer dividend stock in the energy sector to buy in December. This energy infrastructure company has been uninterruptedly paying dividends for seven decades. Moreover, it has consistently increased its distribution for 30 consecutive years. Including the recent dividend growth announced earlier this month, Enbridge pays a quarterly dividend of $0.943 per share, reflecting a compelling yield of more than 6%.
The company's extensive liquids pipeline network, high system utilization, power-purchase agreements, and regulated tolling frameworks position it well to consistently expand its earnings and distributable cash flow (DCF) in all market conditions. This will support higher dividend payouts in the coming years.
The company invests in conventional and renewable assets to capitalize on energy demand. Moreover, its focus on strategic acquisitions to enhance low-risk earnings base augurs well for future distributions.
The energy giant projects mid-single-digit growth in its bottom line and DCF per share in the long term. This will help Enbridge increase its dividends at a similar pace in the long term. The firm also has a payout ratio of 60-70% of its DCF, which suggests that its dividends are well-covered and sustainable in the long term.
Energy stock #2
Dividend investors looking for top Canadian energy stocks for December could also consider Canadian Natural Resources (TSX:CNQ). This pure-play oil and gas company is famous for its stellar dividend payment history and ability to grow its quarterly dividends at a solid pace.
The Canadian energy company has increased its dividend for 25 consecutive years, reflecting a compound annual growth rate (CAGR) of 21%. This high dividend-growth rate reflects the company's ability to grow its cash flows at a solid pace and commitment to rewarding its shareholders with higher distributions.
Canadian Natural Resources is well-positioned to maintain this dividend growth trend. Its long-life, low-decline assets, solid balance sheet, and operating efficiency will drive its earnings and cash flows, supporting higher payouts. Moreover, its well-balanced production, strategic acquisitions, and focus on low-capital, high-growth projects augur well for future cash flows.
Canadian Natural Resources's ability to generate sustainable free cash flow will support future payouts. It currently pays a quarterly dividend of $0.563 per share, reflecting a yield of 4.9%.
Energy stock #3
Besides Enbridge and Canadian Natural Resources, investors could consider TC Energy (TSX:TRP) stock in the energy sector for its dependable dividend payouts. This energy infrastructure company has consistently grown its dividend since 2000, and its dividends have grown at a CAGR of about 7% during the same period.
TC Energy's highly contracted and regulated asset base enables it to generate solid earnings and cash flow, supporting higher dividend payments.
The energy giant's earnings and cash flows will likely benefit from a high asset utilization rate, secured capital projects, and a focus on productivity savings and debt reduction. This will enable TC Energy to boost its shareholder value through higher payouts. In the long term, it projects a 3-5% annual increase in its dividends and offers an attractive yield of 5.8%.
