The US stock market is currently hitting all-time highs, making investors happy. But nothing lasts forever and sell-offs are an integral part of long-term investing. Instead of panicking, view selloffs as an opportunity to buy great companies at lower prices.
Buying dividend stocks at lower prices means starting with higher yields and generating more passive income with your money. Here are four fabulous dividend energy stocks as preferred buys that can put big money in your pocket.
When prices fall, buy these four energy stocks. You will cover North America’s energy infrastructure.
1. NextEra Energy
Fossil fuels aren’t going away anytime soon, but renewable energy is increasingly contributing to the U.S. power grid. NextEra Energy (NYSE: NO) is one of the world’s largest producers of green energy and the largest electric utility company in the United States. The growth of renewable energy has driven significant returns on investment. Since its IPO, NextEra has beaten the S&P500.
The company is also a great dividend growth stock. The payout has increased over 30 years and investors benefit from a solid starting yield of 3.7%.
The best part? Its dividend growth. Management has increased the dividend by an average of 11% per year over the past five years and plans increases of at least 10% this year. This makes NextEra a dividend growth stock you want to own whenever the price drops.
2. ExxonMobil
Energy giant ExxonMobil (NYSE:XOM) explores, refines and sells energy products worldwide. The main strengths of the company in the Permian Basin and Guyana will serve as ExxonMobil’s base for fossil fuel production. Additionally, ExxonMobil has invested in other areas, including carbon capture and lithium mining, to diversify.
Financially, ExxonMobil is rock solid with just $6 billion in net long-term debt (total minus cash). The company has paid and increased its dividend for 42 consecutive years, enduring the industry’s down cycles, recessions and pandemic. Investors can purchase the stock with confidence and benefit from its starting yield of 3.5%. Management is redemption $40 billion in stock over the next two years, a sign of confidence in the company.
3. Enbridge
Oil and gas must be transported from where they are extracted to refineries and exported. It doesn’t happen alone. Intermediate sector companies such as Enbridge (NYSE:ENB) own extensive pipeline and storage networks to make this possible.
Enbridge is one of the largest energy companies in North America. Its pipeline network stretches thousands of kilometers from Canada to the Gulf of Mexico. It also operates renewable energy projects and a natural gas utility company.
Enbridge acts as a tollbooth, making money from fees when oil and gas travel through its pipelines. This makes the business less volatile and the utility sector also helps create reliable sources of income.
Enbridge has increased its dividend for 28 consecutive years, a testament to its business model. Additionally, investors benefit from a high starting yield of 7.4%. The payout ratio is a manageable 81%, so investors can have reasonable confidence in it despite its unusually high yield.
4. Child Morgan
A peer of Enbridge, Children Morgane (NYSE:KMI) is a pipeline company that transports natural gas, oil and other materials through a network that stretches more than 80,000 miles and covers most of the United States. Natural gas is Kinder Morgan’s primary business. About 40% of U.S. natural gas production is estimated to pass through its grid at any given time, making it a crucial part of U.S. energy. The company has paid and increased its dividend over the past seven years.
Today, the dividend payout ratio is healthy, at 61% of Kinder Morgan’s cash flow. Additionally, management estimates that U.S. demand for natural gas will increase 19% by 2030, and exports of liquefied natural gas and Mexico, where Kinder Morgan’s lines pass, will nearly double from current levels. This creates a backdrop for potential growth over the coming years, making Kinder Morgan a dividend stock worth snapping up with its high starting yield of 6.3%.
Should you invest $1,000 in NextEra Energy right now?
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Justin Pope has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Enbridge, Kinder Morgan and NextEra Energy. The Mad Motley has a disclosure policy.
4 Supercharged Dividend Stocks to Buy in a Stock Market Liquidation was originally published by The Motley Fool
