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

sources of renewable energy
Energy Stocks

Canadian Renewable Energy Stocks to Buy Now

Renewable companies in Canada are currently struggling through a challenging phase, but quite a few of them are still worth…

Read more »

oil pump jack under night sky
Energy Stocks

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

CNQ stock is down in recent months. Is a rebound on the way next year?

Read more »

a person looks out a window into a cityscape
Energy Stocks

2 No-Brainer Energy Stocks to Buy With $500 Right Now

Two low-priced energy stocks can reward investors who have limited capital with far superior returns than expensive peers.

Read more »

canadian energy oil
Energy Stocks

Where Will Suncor Stock Be in 1 Year?

Suncor Energy Inc (TSX:SU) stock is doing well this year. Will it still be doing well next year?

Read more »

A worker overlooks an oil refinery plant.
Energy Stocks

Best Stock to Buy Right Now: Cenovus vs Baytex?

It may not seem like a good time to buy most energy stocks, but there are always exceptions.

Read more »

A bull and bear face off.
Energy Stocks

Dividend Investors: Top Canadian Energy Stocks for November

These three dividend-payers are on a bullish uptrend.

Read more »

analyze data
Energy Stocks

Buy 8,850 Shares of This Top Dividend Stock for $2,000/Month in Passive Income

Let's do the math on what it would take to generate $2,000 a month in passive income from Enbridge (TSX:ENB)…

Read more »

oil and gas pipeline
Energy Stocks

Is TC Energy Stock a Good Buy?

TC Energy stock has a lot going for it, but there are also a few red flags to consider before…

Read more »