Energy stocks have gotten off to a blistering start to 2024. The average energy stock has gained more than 12.5%, as measured by the Energy Select Sector SPDR ETF. That outpaced the equally red-hot S&P 500‘s 10.2% gain.
However, there are still some compelling opportunities in the sector. Enbridge (NYSE: ENB) and Brookfield Renewable (NYSE: BEPC)(NYSE: BEP) stand out as two of the top energy stocks to buy this April. Here’s why they could fuel high-octane total returns from here.
Getting better by the deal
Enbridge has gotten off to a very sluggish start to the year, with shares barely budging. That’s a headscratcher, given the Canadian pipeline and utility giant’s progress already this year. In early February, Enbridge reported solid fourth-quarter results. It reported a 6% increase in its adjusted EBITDA last year, its 18th straight year of achieving its financial guidance. Meanwhile, a month later, Enbridge extended its visible growth outlook through 2026, expecting to deliver 7% to 9% annual adjusted EBITDA growth during that period.
One factor fueling its growth is the pending acquisition of three natural gas utilities from Dominion. The company hailed the $14 billion transaction as a “once-in-a-generation” opportunity. It closed the first of the three utility acquisitions last month and anticipates closing the other two by the end of this year.
Meanwhile, the company secured another needle-moving investment opportunity last month. It formed a joint venture to combine its Rio Bravo pipeline project with a couple of other pipelines to create a leading gas supply system from the Permian Basin to the Gulf Coast. The deal will be immediately accretive to its earnings, diversify and increase its cash flow, optimize its balance sheet, and enhance its growth.
With its shares barely moving despite all this progress, Enbridge looks like an even more compelling buy this month. It currently offers a 7.5%-yielding dividend that should continue growing as it increases its cash flow; Enbridge has raised its dividend for 29 consecutive years. That combination of yield and…
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