Energy of all kinds is vital to modern life. But the world doesn't sit still, either, and the types of energy that the world demands are starting to change. Although an all-of-the-above strategy is the most likely outcome, there is a clear growth advantage for low- or no-carbon energy sources right now. And that puts companies like NextEra Energy (NEE -0.12%), TotalEnergies (TTE -0.41%), and Enbridge (ENB 0.94%) in prime position to benefit. If you have $1,000, or more, to invest, you need to examine this trio of energy stocks.
1. NextEra Energy is a giant in two ways
NextEra Energy's core business is providing electricity. However, it goes about this in two different ways. The boring part is the company's regulated utility operation in Florida. Florida has benefited from in-migration for years. NextEra's operations in the state not only have a growth bias but also happen to make the utility one of the largest regulated utilities in the country. There is a solid foundation here.
On top of that foundation, NextEra Energy has built one of the largest wind and solar companies in the world. This is NextEra's growth engine, helping to power dividend growth that has averaged around 10% a year over the past decade. That's a massive number for a utility. And given the ongoing shift away from carbon energy sources to cleaner ones, it seems likely that this growth engine will continue to power NextEra for years to come. The utility's yield, meanwhile, is still a fairly attractive 3.2%. A $1,000 investment will net you roughly 14 shares of the stock.
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2. TotalEnergies is using "dirty" money to invest in "clean" assets
French integrated energy giant TotalEnergies has a similar story to tell. The company has a globally diversified business producing, transporting, and processing oil and natural gas. Although not as bad as coal, oil is considered a very dirty fuel. TotalEnergies has been moving toward natural gas, which is cleaner burning, in an attempt to change with the times. That's not shocking, since most of its peers are doing the same basic thing.
What TotalEnergies is doing differently is that it is also aggressively building out a business around electricity and renewable power. Some of its peers had said they would do the same thing, but then changed direction. If anything, TotalEnergies' plans have expanded in the clean energy space. In 2024 the company's integrated power business grew 17% and made up around 10% of operating segment income. With a lofty 6.4% yield TotalEnergies looks like a differentiated opportunity in the energy patch. (U.S. investors have to pay French taxes on the income, some of which can be claimed back come tax time) A $1,000 investment will get you around 16 shares of the stock.
3. Enbridge is a toll taker with a clean twist
The clear theme here is energy companies that are starting to build out their clean energy businesses using profits from older sources of power. Enbridge is no different, but it approaches the oil and natural gas sector from a very different direction. As a North American pipeline giant it simply moves oil and natural gas, it doesn't produce it. Its portfolio of energy infrastructure assets produces reliable cash flows regardless of energy prices. And that makes it appropriate for more conservative investors who want to avoid the commodity swings that are inherent in a business like TotalEnergies. Notably, Enbridge's dividend yield is an attractive 5.8% and is backed by dividend increases in each of the last 30 years.
The core of the business is moving oil and natural gas. But Enbridge has lately been focusing on its shift toward natural gas. The big move was buying three regulated natural gas utilities, which materially increased the company's exposure to this fuel as it reduced its exposure to oil-related assets. But the sleeper investment here is in clean energy, with Enbridge having material investments in things like offshore wind in Europe. Even though the clean energy business makes up less than 5% of earnings before interest, taxes, depreciation, and amortization (EBITDA), it shows that Enbridge sees the future. And that it is preparing now for that future. A $1,000 investment will get you around 21 shares.
Smart companies prepare ahead of time
The world will need oil and natural gas for decades to come, so it isn't like companies are making a mistake if they focus solely on these fuels. But the writing is on the wall: Clean energy sources are likely to be increasingly important in the future. Which is why the smartest companies are getting ready now, using the profits from their older businesses to invest in the future. If that sounds like a good plan to you, you'll want to look at NextEra Energy, TotalEnergies, and Enbridge today.
