The U.S. stock market is currently at all-time highs, which has been a joy for investors. But nothing lasts forever, and sell-offs are a normal part of long-term investing. Instead of panicking, treat sell-offs like 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 prime buys that can put lots of cash in your pocket.
When prices fall, buy these four energy stocks. You'll have North America's energy infrastructure covered.
1. NextEra Energy
Fossil fuels aren't going away anytime soon, but renewable energy has steadily contributed more to America's electric grid. NextEra Energy (NEE -1.36%) is one of the world's largest green energy producers and the largest electric utility business in the United States. Growth in renewable energy has fostered big investment returns. Since going public, NextEra has beaten the S&P 500.
The company is also an excellent dividend growth stock. The payout has increased for 30 years, and investors get a solid 3.7% starting yield.
The best part? Its dividend growth. Management has raised the dividend by an average of 11% annually over the past five years and is guiding for 10% increases through at least this year. That makes NextEra a dividend growth stock you want to snap up whenever the price dips.
2. ExxonMobil
Energy giant ExxonMobil (XOM -2.78%) explores for, refines, and sells energy products worldwide. The company's premier assets in the Permian Basin and Guyana will serve as ExxonMobil's foundation for fossil fuel production. Additionally, ExxonMobil has invested in other areas, including carbon capture and lithium mining, to diversify itself.
Financially, ExxonMobil is rock-solid with just $6 billion in net (total minus cash) long-term debt. The company has paid and raised its dividend for 42 consecutive years, enduring the industry's down cycles, recessions, and a pandemic. Investors can confidently grab the stock and enjoy its starting 3.5% yield. Management is repurchasing $40 billion of shares over the next two years, a sign of confidence in the business.
3. Enbridge
Oil and gas must move from where they are extracted to refineries and exports. This doesn't happen by itself. Midstream companies like Enbridge (ENB -1.21%) own vast networks of pipelines and storage to make this possible.
Enbridge is one of North America's largest energy companies. Its network of pipelines spans thousands of miles from Canada to the Gulf of Mexico. It also operates renewable energy projects and a natural gas utility business.
Enbridge acts like a toll booth, making money on fees when oil and gas flow through its lines. That makes the business less volatile, and the utility business also helps create dependable revenue streams.
Enbridge has raised its dividend for 28 consecutive years, a testament to its business model. Additionally, investors get a high starting yield of 7.4%. The payout ratio is manageable at 81%, so investors can feel reasonably confident in it despite its abnormally high yield.
4. Kinder Morgan
A peer of Enbridge's, Kinder Morgan (KMI -0.64%) is a pipeline company that transports natural gas, oil, and other materials through a network that spans over 80,000 miles and covers most of the United States. Natural gas is Kinder Morgan's primary business. It moves an estimated 40% of America's natural gas production flowing through its system at some point, which makes it a crucial component of U.S. energy. The company has paid and raised its dividend for the past seven years.
Today, the dividend payout ratio is healthy at 61% of Kinder Morgan's cash flow. Additionally, management believes that U.S. demand for natural gas will grow by 19% by 2030, and liquified natural gas and Mexican exports, where Kinder Morgan's lines run, will nearly double from current levels. That creates a backdrop for potential growth over the coming years, making Kinder Morgan a dividend stock worth scooping up at its hefty starting yield of 6.3%.
