3 Top Energy Stocks to Buy in 2022

Are you looking for top energy stocks to buy in 2022? You’ll definitely want to check out this renewable energy stock then.

Energy is an essential part of our lives. The decarbonization transition is happening, but it’s going to take years. Meanwhile, here are three top energy stocks that are solid plays for 2022 and beyond.

Canadian Natural Resources stock

Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ) was a surprisingly resilient energy stock during the pandemic last year when world economies shut down. In 2020, although the energy stock reported a net loss of $435 million and generated operating cash flow at only half its normal levels, it went on increasing its dividend like it did in the last 20 years or so. This is a clear demonstration of shareholder friendliness.

It’s important to point out that management did not blindly increase its dividend carelessly. Its 2020 free cash flow generation was sufficient to cover the dividend payments with $204 million left over.

Scotia Capital has a “Sector Outperform” rating on CNQ and describes the company as

“deeply rooted in the Canadian energy industry and, through organic growth as well as both property and corporate acquisitions, has become one of the dominant producers of conventional oil and gas in Western Canada. The company has active operations internationally in the North Sea and Africa. It is also a significant oil sands producer…”

Jason Bouvier, the analyst at the big bank also had a neutral take on CNQ’s acquisition of Storm Resources last month, as the latter was 2% of the company’s production.

At under $52 per share, the energy stock yields 4.5% and has almost 22% near-term upside potential based on the analyst 12-month average price target.

TC Energy stock

If you’re a risk-averse investor, you might prefer lower-risk energy infrastructure stocks like TC Energy (TSX:TRP)(NYSE:TRP) over an oil and gas producer like CNQ that is easily impacted by volatile commodity prices. TC Energy primarily transports energy (mostly natural gas), but it also has a liquids pipeline network, natural gas storage assets, and about 4,200 MW of power generation capacity.

TC Energy has the same dividend-growth streak as Canadian Natural Resources. However, because of the stability of its cash flow, there was no question that the energy stock could keep its dividend safe during the testing economic times last year.

At about $60 per share, the energy stock yields almost 5.8% and has a near-term upside potential of 11% based on the analyst 12-month average price target. TC Energy is perfect for conservative investors looking for high passive income.

Brookfield Renewable stock

Renewable energy is the energy of the future, though the transition to renewable energy will take decades. This also suggests that Brookfield Renewable Partners (TSX:BEP.UN)(NYSE:BEP) will have decades to grow.

Here’s Scotia Capital analyst, Robert Hope’s commentary on BEP last month:

“…We view Brookfield Renewable as a well-run company with premium assets and a strong growth profile, which warrants a premium valuation. Given fund flows towards ESG-friendly names as well as additional clarity on its robust growth profile, we believe that Brookfield Renewable’s valuation will remain higher than in the past…”

What’s its growth profile? The pure-play renewable power platform has about 20,600 MW of operational capacity across its multi-technology portfolio, and it has about 35,700 MW of projects in development. That is a big backlog.

The energy stock has approximately 20% near-term upside potential, and it yields 3.4% — a growing cash distribution in the 5-9% range.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool recommends CDN NATURAL RES. Fool contributor Kay Ng owns shares of Brookfield Renewable.

More on Energy Stocks

man touches brain to show a good idea
Energy Stocks

1 No-Brainer Energy Stock to Buy With $500 Right Now

Should you buy a cyclical energy stock at its decade-high? Probably not. But read this before you make a decision.

Read more »

A solar cell panel generates power in a country mountain landscape.
Energy Stocks

Top Canadian Renewable Energy Stocks to Buy Now

Here are two top renewable energy stocks long-term investors can put in their portfolios and forget about for a decade…

Read more »

oil and gas pipeline
Energy Stocks

Where Will Enbridge Stock Be in 3 Years?

After 29 straight years of increasing its dividend and a current yield of 6%, here's why Enbridge is one of…

Read more »

Pumpjack in Alberta Canada
Energy Stocks

Is Enbridge Stock a Buy, Sell, or Hold for 2025?

Enbridge stock just hit a multi-year high.

Read more »

oil pump jack under night sky
Energy Stocks

Where Will CNQ Stock Be in 3 Years?

Here’s why CNQ stock could continue to outperform the broader market by a huge margin over the next three years.

Read more »

engineer at wind farm
Energy Stocks

Invest $20,000 in This Dividend Stock for $100 in Monthly Passive Income

This dividend stock has it all – a strong outlook, monthly income, and even more to consider buying today.

Read more »

A worker overlooks an oil refinery plant.
Energy Stocks

Is Imperial Oil Stock a Buy, Sell, or Hold for 2025?

Valued at a market cap of $55 billion, Imperial Oil pays shareholders a growing dividend yield of 2.4%. Is the…

Read more »

Pumpjack in Alberta Canada
Energy Stocks

Where Will Imperial Oil Stock Be in 1 Year?

Imperial Oil is a TSX energy stock that has delivered market-thumping returns to shareholders over the last two decades.

Read more »