The energy sector has muddled along this year. While the broader market has rallied sharply (the S&P 500 is up more than 15%), energy stocks are mostly flat (the Energy Select Sector SPDR ETF is up less than 2% year to date). Because of that, many energy stocks look relatively attractive these days.

Brookfield Infrastructure (BIPC -1.04%) (BIP -0.80%), Energy Transfer (ET 0.12%), and NextEra Energy Partners (NEP -0.89%) stand out from the pack. They trade at lower valuations, giving them higher dividend yields. They look like screaming buys this month because of that and their growth prospects.

Dirt cheap despite rapid growth

Brookfield Infrastructure is roughly flat on the year. That's despite growing its funds from operations (FFO) by nearly 10% per share through the second quarter. The energy, transportation, and data-infrastructure company benefited from strong organic growth drivers (elevated inflation driving higher rates and $1 billion of new capital-project completions, including a new petrochemical complex in Canada). It also got a boost from over $2.1 billion of new acquisitions. 

Those growth catalysts have the company on track to generate about $3 per share of FFO this year. With Brookfield Infrastructure Corporation trading at less than $39 per share, it has a dirt-cheap valuation of 13 times earnings. Meanwhile, the partnership units of Brookfield Infrastructure Partners are even cheaper at less than $32 apiece or 10.7 times FFO. For comparison, the S&P 500 fetches nearly 20 times earnings. Those low valuations have Brookfield offering a high dividend yield (4.8% for the partnership and 3.9% for the corporation versus about 1.5% for the S&P 500). 

Meanwhile, the company has a lot of growth momentum heading into 2024. It has secured three more needle-moving transactions. It's buying two more data-center platforms and a leading container-leasing company. In addition, Brookfield and its partner Intel are on track to complete two new semiconductor-manufacturing facilities next year. Intel recently revealed that it's accelerating the construction of those facilities after receiving a large customer prepay order. Those growth drivers should give Brookfield the fuel to continue increasing its already high-yielding dividend, which it expects to raise by 5% to 9% annually. 

Securing another needle-moving deal

Units of Energy Transfer have rallied more than 13% this year. However, the master limited partnership (MLP) is still pretty cheap. Its current unit price of around $13.50 is well below the analysts' median price target ($17) and where it would trade if it had the same valuation multiple as its large midstream peers ($24). Because of that, it has significant upside potential.

The company has added to its value proposition this year by making two needle-moving acquisitions. It spent nearly $1.5 billion to buy Lotus Midstream in a deal that will immediately increase its distributable and free cash flow. Meanwhile, it recently agreed to buy Crestwood Equity Partners in a $7.1 billion deal. That deal will also immediately increase its distributable cash-flow per unit. In addition, the company sees the potential to capture commercial opportunities and refinance Crestwood's debt, further increasing the value creation of the deal. 

Those two deals will give the company more fuel to grow its distribution, which already yields an impressive 9.2%. Energy Transfer plans to increase that payout by 3% to 5% per year, fueled by organic growth and its midstream consolidation strategy. 

Plunging despite powerful growth

NextEra Energy Partners has tumbled nearly 30% this year. The culprit is the concern about how it will fund its dividend-growth strategy amid the surge in interest rates. That sell-off has pushed the company's dividend yield up to 6.9%.

In May, the company addressed those worries by unveiling a plan to become a pure-play renewable energy company. NextEra Energy Partners intends to sell its natural gas pipeline investments and use the proceeds to complete all planned buyouts of its convertible equity-portfolio financings through 2025. Those sales will also allow it to fund new renewable energy investments. 

NextEra Energy Partners believes this capital-recycling strategy will enable it to deliver on its plan to increase its already high-yielding dividend by 12% to 15% annually through 2026. That combination of income and growth could give the company the fuel to produce high-powered total returns in the coming years. 

Powerful total return potential

Brookfield Infrastructure, Energy Transfer, and NextEra Energy Partners all trade at low valuations these days. Because of that, they offer higher-yielding dividends. All of them expect to continue growing those already-attractive payouts. That combination of growth and income for a low valuation makes this trio look like screaming buys this September. They could all produce market-crushing total returns from here as they execute their growth plans.