Investing in energy stocks doesn’t have to be expensive. In fact, there are several strong options on the TSX that can provide a solid mix –one of stability, growth potential, and passive income without requiring a large upfront investment. Among these, Brookfield Renewable Partners LP (TSX:BEP.UN), Hydro One (TSX:H), and ARC Resources (TSX:ARX) stand out as affordable yet promising picks, especially for investors looking to build wealth without breaking the bank.
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BEP stock
Brookfield Renewable Partners has long been a favourite for those seeking exposure to renewable energy. The energy stock owns and operates a diverse portfolio of hydroelectric, wind, solar, and storage facilities across the globe. In its most recent earnings report, Brookfield Renewable announced record Funds From Operations (FFO) of $1.2 billion for the year ending December 31, 2024, representing $1.83 per unit, a 10% increase from the previous year.
This growth led to a 5% increase in their quarterly distribution, now set at $0.373 per unit, payable on March 31, 2025. The company reported a net loss of $464 million. Yet its strong cash flow generation and commitment to increasing distributions highlight its resilience.
H stock
Hydro One is another compelling option for Canadian investors. As Ontario’s largest electricity transmission and distribution provider, Hydro One plays a critical role in the province’s energy infrastructure. In its fourth-quarter earnings for 2024, the company posted net income of $1.2 billion for the year, with basic earnings per share (EPS) rising to $0.33 in the quarter, up from $0.30 a year earlier.
Hydro One’s steady performance is underpinned by regulated operations that provide predictable cash flow, thus making it an attractive choice for conservative investors. With a current annualized dividend of $1.26 per share, representing a yield of around 2.8%, Hydro One offers a reliable income stream along with potential capital appreciation.
ARX stock
For those interested in traditional energy, ARC Resources provides exposure to oil and natural gas production. The energy stock reported strong results for 2024, with net income attributable to common shareholders reaching $1.1 billion and diluted EPS of $1.88.
ARC Resources generated $2.4 billion in operating cash flow over the trailing 12 months, demonstrating its ability to weather commodity price fluctuations while maintaining strong profitability. The energy stock currently offers a forward annual dividend of $0.76 per share, yielding approximately 2.8%. This balance of income and growth potential makes ARC Resources an appealing choice for investors seeking exposure to the energy sector without excessive risk.
Similar strengths
Despite their differences, all three companies share a common thread. Those are solid fundamentals, dependable dividends, and affordable share prices. Looking ahead, the outlook for these energy stocks remain positive. Brookfield Renewable is well-positioned to capitalize on the global transition to clean energy, with plans to expand its renewable asset base further. Hydro One, with its regulated monopoly in Ontario, offers stability and the potential for incremental growth through infrastructure investments and rate base expansion. Meanwhile, ARC Resources is poised to benefit from strong demand for natural gas, further supporting the company’s cash flow and dividend sustainability.
For investors looking to build a diversified portfolio within the energy sector, these three energy stocks offer an appealing combination of affordability, income potential, and long-term growth. Each provide exposure to different segments of the energy market, thus allowing investors to spread risk while benefiting from sector-specific trends. Whether you’re focused on sustainability, stability, or higher returns, Brookfield Renewable Partners, Hydro One, and ARC Resources provide compelling opportunities without requiring a significant upfront investment.
Bottom line
Ultimately, investing in energy stocks doesn’t have to be complicated or costly. With share prices well under $100, in a diversified portfolio, these stocks make it easy for investors to gain exposure to essential sectors of the economy. All while enjoying the benefits of reliable dividends and potential capital gains. As always, it’s wise to do your own research. Consider your financial goals, and consult with a financial advisor before making any investment decisions. But for those looking to power up their portfolios, Brookfield Renewable, Hydro One, and ARC Resources offer a smart place to start.
