There's a new administration in Washington, D.C., and it has a short-term plan for the energy sector whose key goal is to quickly lower energy prices for consumers. But income-focused investors looking for long-term ideas shouldn't be thinking about buying companies just because they might benefit for the next couple of years based on what has real potential to be temporary government policies. They should be thinking about companies that can handle whatever gets thrown at them and can thrive for the next several decades.
For energy stock dividend investors who want to buy now and hold for the long term, consider Chevron(NYSE: CVX), Enterprise Products Partners(NYSE: EPD), and Brookfield Renewable(NYSE: BEP)(NYSE: BEPC). These high-yield energy stocks have unique attributes that will allow them to survive and thrive in just about any energy market scenario.
Chevron is sitting on a solid foundation
Falling energy prices would be a net negative for Chevron, given that a large part of its business is tied to the upstream (energy production). However, the company is integrated, so it also has exposure to the midstream (pipelines) and downstream (refining and chemicals). Those two segments of the energy sector have different dynamics than the upstream and help to soften the blow from low energy prices.
In addition to benefiting from a fundamentally diversified operating portfolio, Chevron happens to have a very strong balance sheet. Its debt-to-equity ratio is 0.16x, which would be low for any company. Low leverage allows management to take on debt during the hard times so it can continue to invest in its business and pay reliable dividends. To that end, Chevron's dividend has been increased annually for an impressive 37 years. When energy markets improve, the company pays down debt.
Chevron is built from the ground up to be a survivor, and you can collect a hefty 4.3% dividend yield if you buy it today.
Energy prices aren't a big deal for Enterprise Products Partners
The upstream and the downstream sectors tend to be commodity-driven. The midstream sector is fee-driven. Essentially, companies like Enterprise Products Partners own the energy infrastructure, such as pipelines, that helps move oil and natural gas around the world. The price of the commodities flowing through Enterprise's system is less important than volume because it simply collects tolls for the use of its assets. Energy is vital to the modern world, and volume tends to remain steady in both good energy markets and bad ones.
That alone might be enough to entice investors to buy Enterprise and its ultra-high 6.3% distribution yield. But, like Chevron, it also boasts impressive financial strength. For example, it has an investment-grade-rated balance sheet, and its distributable cash flow covers its distribution by 1.7x, leaving a lot of room for adversity before the distribution would be at risk. Notably, this North American midstream giant has increased its distribution annually for 26 consecutive years.
If you want energy exposure but are reluctant to take on the commodity risk, Enterprise could be a brilliant solution.
Brookfield Renewable shifts the energy story
Chevron and Enterprise are both directly tied to the oil and natural gas sectors. Brookfield Renewable owns and develops renewable power. While it's not directly comparable, per se, clean energy demand is expected to keep growing for decades as the world increasingly shifts toward cleaner energy alternatives. Add in a huge 6.5% yield for Brookfield Renewable's partner units and an attractive 5.2% yield for its corporate share class, and energy investors might be willing to take a slight energy detour here. (The two share classes represent the same entity, with the yield difference related to higher demand for the corporate share class.)
Brookfield Renewable had a "record" year in 2024, with funds from operations up 10%. But more important was management's comment that "Our pipeline of growth opportunities is as robust as ever." There are several factors here, including an increase in electricity demand, the attractiveness of renewable power to meet that demand, and Brookfield's pipeline of projects that are fairly well along in their development.
The distribution was increased by 5% at the start of 2025. That adds another year of growth to this relatively young business' dividend growth track record. Right now, Brookfield Renewable is operating in a unique environment. Mature clean energy assets that produce reliable cash flows are selling for attractive prices for the seller, allowing the company to raise capital by recycling its assets. Projects that aren't mature, meanwhile, are selling at attractive prices for experienced buyers with strong finances, allowing Brookfield Renewable to pick up assets on the cheap. Now is a great time to look at this industry-leading clean energy play if you want to add some diversification to your investment in carbon fuel stocks.
Think in decades, not days, for dividend safety
If you are looking to build a dividend portfolio to help pay the bills in retirement, then the next three or four years aren't your main concern. What you want to own are companies that are robust against anything that might happen over that timeframe, so they can keep paying you dividends, year in and year out, over the next few decades. Right now, Chevron, Enterprise, and Brookfield Renewable look like they offer an attractive balance between dividend income and risk for just about any dividend investor.
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Reuben Gregg Brewer has positions in Brookfield Renewable Partners. The Motley Fool has positions in and recommends Chevron. The Motley Fool recommends Brookfield Renewable, Brookfield Renewable Partners, and Enterprise Products Partners. The Motley Fool has a disclosure policy.
