Energy Stocks
Resource and commodity stocks in general should make up only a limited portion of your portfolio—say less than 20% for a conservative investor or as much as 30% for an aggressive investor. And as part of that segment, energy stocks could make up, say half of that total. The rest could be fertilizer stocks, mining stocks and so on.
Oil and gas stocks have been below-average performers lately, and many investors are tempted to get out of the industry altogether. However, the energy sector can play a crucial role in your portfolio as a hedge against inflation. The low inflation rates of the past couple of decades deserve some of the blame for the poor performance of the sector. However, energy stocks will likely rebound in years to come as the global economy recovers.
- Invest mainly in well-established companies;
- Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; Consumer; Finance; Utilities);
- Downplay or avoid stocks in the broker/media limelight.
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Energy Stocks Library Archives
ALGONQUIN POWER & UTILITIES, $9.52, is a buy. The utility (Toronto symbol AQN; Shares outstanding: 768.2 million; Market cap: $7.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.9%; www.algonquinpower.com) completed the sale of its 42.2% ownership stake in Atlantica Sustainable Infrastructure plc in December 2024 for $1.08 billion (all figures except share price and market cap in U.S. dollars). Algonquin also sold its non-regulated renewable energy business to LS Power in January 2025 for up to $2.5 billion. Today, Algonquin focuses entirely on its regulated utilities, which supply electricity, gas, water distribution and wastewater collection services to 32 million customers in Canada, the U.S., Chile and Bermuda.
The shares of oil and gas stocks remain high as energy demand stays strong. The emerging disruption to oil exports from the Middle East is another driver of short-term growth. We continue to recommend that most investors maintain some exposure to the oil and gas industry as part of a balanced portfolio. To cut risk, you should stick with producers that have positive cash flow even in times of low energy demand and prices. Here are two stocks that should meet that requirement. Moreover, they pay solid dividends:
ARC RESOURCES, $25.61, is a buy. The company (Toronto symbol ARX; Shares o/s: 575.7 million; Market cap: $14.8 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.3%; www.arcresources.com) produces natural gas as well as oil. Its average output of 408,382 barrels of oil equivalent per day is 58% natural gas and 42% oil.
ARC RESOURCES, $25.61, is a buy. The company (Toronto symbol ARX; Shares o/s: 575.7 million; Market cap: $14.8 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.3%; www.arcresources.com) produces natural gas as well as oil. Its average output of 408,382 barrels of oil equivalent per day is 58% natural gas and 42% oil.
DEVON ENERGY, $44.44 (New York symbol DVN; TSINetwork Rating: Average) (www.dvn.com; Shares o/s: 620.3 million; Market cap: $27.6 billion; Dividend yield: 2.2%) is now buying COTERRA ENERGY, $31.47 (New York symbol CTRA; TSINetwork Rating: Average) (www.coterra.com; Shares o/s: 758.6 million; Market cap: $23.9 billion; Yield: 2.8%).
The roughly $21.5 billion all-stock deal will create one of the largest U.S. oil-and-gas producers and another dominant player in the Permian Basin of West Texas and New Mexico. Both companies currently operate in that oil rich region.
The roughly $21.5 billion all-stock deal will create one of the largest U.S. oil-and-gas producers and another dominant player in the Permian Basin of West Texas and New Mexico. Both companies currently operate in that oil rich region.
Oil prices have declined in recent months on fears about a possible global economic slowdown, which would lower demand. At the same time, increased production by OPEC countries and the removal of Venezuelan President Nicolás Maduro could significantly lift global supply. Despite the recent weakness, we continue to recommend that investors maintain some exposure to the oil sector as a hedge against inflation. To further cut your risk, stick with high-quality producers such as Imperial Oil.
CENOVUS ENERGY, $27.69, is a buy for long-term gains. Canada’s third-largest oil producer (Toronto symbol CVE; Shares outstanding: 1.9 billion; Market cap: $50.2 billion; TSINetwork Rating: Average; Dividend yield: 2.9%; www.cenovus.com) is reportedly considering the sale of its conventional oil and gas properties in the Deep Basin region of Alberta. Those assets could be worth $3 billion.
ELI LILLY & CO., $1,078.52, is still a buy. The company (New York symbol LLY; TSINetwork Rating: Above Average) (www.lilly.com; Shares outstanding: 895.0 million; Market cap: $965.3 billion; Dividend yield: 0.6%) discovers, develops, manufactures and markets human pharmaceutical products. The stock continues to hit new all-time highs for our subscribers.
The capture of Venezuelan president Nicolas Maduro by the U.S. and the Trump administration’s plan to increase oil production in that country initially hurt the stock prices of Canadian producers including Suncor and Cenovus. That’s mainly because higher production would weigh on crude prices and could displace Canadian oil at refineries on the U.S. Gulf Coast. However, it will take years to ramp up Venezuelan production. The situation could also spur the building of new pipelines to deliver Canadian crude to non-U.S. markets.
Oil and gas stocks continue to benefit from still-strong energy demand. Still, to cut risk, stick with producers that have positive cash flow even in times of low energy prices. Here are two that should meet that requirement. Moreover, they pay solid dividends.
CENOVUS ENERGY, $21.95, is a buy for long-term gains. The company (Toronto symbol CVE; Shares outstanding: 1.9 billion; Market cap: $41.4 billion; TSINetwork Rating: Average; Dividend yield: 3.6%; cenovus.com) is Canada’s third-largest producer of oil and natural gas after Canadian Natural Resources and Suncor. It also operates refineries in Canada and the U.S.
CENOVUS ENERGY, $21.95, is a buy for long-term gains. The company (Toronto symbol CVE; Shares outstanding: 1.9 billion; Market cap: $41.4 billion; TSINetwork Rating: Average; Dividend yield: 3.6%; cenovus.com) is Canada’s third-largest producer of oil and natural gas after Canadian Natural Resources and Suncor. It also operates refineries in Canada and the U.S.
OVINTIV INC. $57 is a buy. The company (Toronto symbol OVV; Conservative Growth Portfolio, Resources sector; Shares outstanding: 257.0 million; Market cap: $14.6 billion; Price-to-sales ratio: 1.2; Dividend yield: 2.9%; TSINetwork Rating: Average; www.ovintiv.com) has agreed to acquire NuVista Energy Ltd. (Toronto symbol NVA), which produces oil and natural gas in the Alberta portion of the Montney Basin.
The shares of oil and gas stocks remain high as energy demand stays strong. We continue to recommend that most investors maintain some exposure to the oil and gas industry as part of a balanced portfolio. To cut risk, you should stick with producers that have positive cash flow even in times of low energy demand and prices. Here are two that should meet that requirement. Moreover, they pay solid dividends:
PEYTO EXPLORATION & DEVELOPMENT, $22.65, is a buy for aggressive investors. This producer (Toronto symbol PEY; Shares outstanding: 201.9 million; Market cap: $4.6 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.8%; www.peyto.com) focuses on both gas and oil in Alberta. Its production is 88% gas and 12% oil.
PEYTO EXPLORATION & DEVELOPMENT, $22.65, is a buy for aggressive investors. This producer (Toronto symbol PEY; Shares outstanding: 201.9 million; Market cap: $4.6 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.8%; www.peyto.com) focuses on both gas and oil in Alberta. Its production is 88% gas and 12% oil.