From pipelines to power plants, these three energy stocks are built to pay you for decades.
Old-school energy sources aren’t going anywhere. Even as the world transitions to cleaner power, oil and gas (and the infrastructure behind them) remain integral to the global economy.
Add in rising electricity demand from AI and data centers, and you have a sector where both old-school titans and new-age renewables can thrive.
If you have $500 and want to build a long-term, diversified position in energy, the goal is pretty simple: Find companies with strong balance sheets, steady dividends, and exposure to both sides of the energy transition. The following three energy stocks fit that bill precisely.
Image source: Getty Images.
1. ExxonMobil: old-school energy with new ambitions
ExxonMobil (XOM -1.96%) is a titan of traditional energy. With operations spanning oil fields, gas stations, and refineries, the oil stock is built to weather just about any price cycle.
It’s a fossil fuel giant, but Exxon isn’t acting like a dinosaur. In December 2024, the company unveiled a bold 2030 plan to generate $20 billion in new earnings and $30 billion in added cash flow, all while deploying $140 billion to major projects and boosting shareholder returns.
About $30 billion of that is earmarked for carbon capture, hydrogen, and lithium developments. That’s not a plan to pivot away from oil per se, but it is one to stay relevant no matter where energy goes next.
More to the present, Exxon has a fortress of a balance sheet, with $18.5 billion in cash at the end of the first quarter and an industry-leading debt-to-capital ratio of about 12%. As the chart below shows, both of these put Exxon in a favorable position in respect to its biggest competitor, Chevron.
CVX Debt To Capital (Quarterly) data by YCharts.
And perhaps most important of all, Exxon pays investors to wait. The company has raised its dividend for 42 consecutive years, with a current yield near 3.5% and plenty of free cash flow to support future increases. Add in that strong balance sheet, ongoing share buybacks, and one of the lowest break-even oil prices in the industry, and you have a cash machine with staying power.
2. Enbridge: a dividend pipeline that’s going solar
Enbridge (ENB 2.01%) is Canada’s energy highway. It transports about 30% of North America’s crude oil and 20% of the U.S. natural gas supply. Fun fact: Its oil pipeline network stretches more than 18,000 miles, long enough to wrap around three-quarters of the Equator.
With a dividend north of 6% and three decades of consecutive hikes, Enbridge has become a go-to for income investors. What really sets it apart, however, is how it is building a dual engine for growth. The company is investing billions annually not just into pipeline expansions, but also offshore, wind, solar, and renewable natural gas.
The strategy is already in motion. Enbridge recently broke ground on Clear Fork, a 600-megawatt solar project near San Antonio, Texas, backed by a long-term power purchase agreement with Meta Platforms. The $900 million facility is expected to come on line in 2027 and start adding cash flow and earnings right away. It’s a clear sign that the company isn’t just moving energy anymore but helping to build infrastructure that will power tech giants and data centers.
3. NextEra Energy: the clean energy leader
NextEra Energy (NEE -0.93%) the lone renewables stock on this list, brings something the other two can’t: long-term growth without the fossil fuel baggage. It’s the world’s largest producer of wind and solar power, and it runs Florida Power & Light, the biggest regulated utility in the country.
In the second quarter, NextEra added 3.2 gigawatts of new clean-energy projects, lifting its total backlog to 30 gigawatts, roughly the size of 30 nuclear reactors. That pipeline gives the company visibility into future earnings, which it expects to grow 6% to 8% annually through 2027.
It’s also targeting 10% dividend growth through at least 2026, building on 29 straight years of increases . Today’s 3% yield may not scream high income, but it’s backed by strong free cash flow and one of the safest payout ratios in the industry.
One caveat is that the company trades at a premium: about 20 times forward earnings. But with projected earnings per share (EPS) of $3.45 to $3.70 this year and unmatched leadership in the renewables race, that premium isn’t empty air. For investors looking to own a piece of the clean energy sector, NextEra Energy seems about as “forever” as it gets.
Powering your portfolio for the long haul
With Exxon’s oil empire, Enbridge’s pipelines, and NextEra’s clean energy runway, investors have options that span the full energy spectrum. Each company brings something different to the table, but all three are built to endure. Whether you’re looking for dividends or stability, these three offer a balanced way to invest in the future of energy.
