If Narrowing Down to a Single Energy Stock Purchase in 2025, These Contenders are Prominent Options
In 2024, the energy sector had an unremarkable year, with the average energy stock in the S&P 500 only managing a 2% gain, far below the S&P 500's impressive over 23% surge. Despite the lackluster performance of energy stocks last year, their future remains promising due to the anticipated surge in energy demand brought about by catalysts like artificial intelligence (AI) data centers. These tech advancements are expected to boost energy consumption for years to come, making it a wise move for investors to hold at least one energy stock in their portfolios.
Three solid energy stock picks to consider for your portfolio, as suggested by Fool.com contributors, are Brookfield Renewable, Enterprise Products Partners, and NextEra Energy.
Why Brookfield Renewable is a worthwhile investment
Reuben Gregg Brewer, a Fool.com contributor, highlights Brookfield Renewable as a shrewd investment opportunity for those looking for clean energy stocks. The market has seemingly cooled on the renewable power space, causing Brookfield Renewable's value to plummet by over half. However, the company is currently offering generous yields of 6.3% for its partnership class and 5.2% for its corporate class. These yields are backed by consistent dividend growth and an ambitious target of 5 to 9% annual distribution growth, making Brookfield Renewable an attractive dividend growth stock.
The company's impressive portfolio spans hydroelectric, solar, wind, storage, and even nuclear energy sources, giving it the flexibility to invest opportunistically and capitalize on various market trends. Brookfield Renewable's international diversification further adds to its appeal as an investment choice with long-term potential.
Invest in Enterprise Products Partners for solid income and growth
Enterprise Products Partners, an MLP that consistently increases its distribution, continued this streak by hiking its quarterly distribution by 1.9% in 2024. Since 2025 will mark the 27th consecutive year of increased distributions, Enterprise Products Partners offers investors an attractive income stream of 6.4%.
The partnership is also projected to enjoy a lucrative future with the completion of several expansion projects and the acquisition of Pinon Midstream, adding substantial new cash flow sources to its portfolio. With an impressive growth pipeline and a strong financial position, Enterprise Products Partners is a compelling long-term energy stock pick.
NextEra Energy shines as a growth-focused stock option
NextEra Energy finished 2024 with a robust 18% increase in its share price, despite experiencing a dip in the last quarter. Despite the dip, analysts are optimistic about NextEra Energy's remarkable growth prospects, particularly due to its strong position in the utility sector and its robust renewable energy backlog, which is projected to grow to an impressive 24 GW by 2027.
Despite its recent gains, NextEra Energy's stock is still considered an attractive long-term investment opportunity due to its strong growth prospects and a consistent track record of raising its dividend per share by nearly 10% over the past decade.
In conclusion, despite modest gains in 2024, the energy sector's future remains promising due to the increasing demand from AI data centers. Three solid energy stock picks for your portfolio are Brookfield Renewable, Enterprise Products Partners, and NextEra Energy, each with unique strengths and appealing investment profiles.
In light of the anticipated surge in energy demand due to advancements in artificial intelligence, it would be prudent for investors to consider allocating some of their financial resources towards energy stocks, such as Brookfield Renewable, Enterprise Products Partners, and NextEra Energy. Despite the recent dip in NextEra Energy's share price, its robust growth prospects in the utility sector and its significant renewable energy backlog make it an attractive long-term investment option for those interested in growing their money in the finance world.
