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Nobody has been spared in 2022. High-growth tech stocks are in decline since the start, and crypto is no exception. Even safe havens such as gold and utilities have been struggling. Recently, energy names joined the bears on recession worries.
Investors should be cautious despite the fact that raging inflation and steeper rate increases are indicating an economic downturn. Because of their strong financial position and pricing power, energy names will still be in a good place. Experts believe that recessions will lead to a decline in demand, rather than severe supply constraints.
The demand-supply imbalance could support higher crude oil prices in the medium to long term, at least. Here are the top two TSX energy dividend stock.
Canadian Natural Resources
Canada’s biggest energy company by market cap, Canadian Natural Resources The sector’s strong name is (TSX CNQ)(NYSE CNQ). It currently yields 5% — higher than TSX stocks. The stock has seen a 25% decline in value since last month, and currently holds a 15% increase for 2022.
The war in Europe and steady demand growth have caused a significant increase in crude oil prices in recent quarters. This led to a massive increase in energy companies’ earnings and free cash flows.
Canadian Natural saw its earnings rise from $1.38 million in Q1 2020 to $3.1 billion Q1 2022. The company’s balance sheet is in better shape than it was before the pandemic.
Due to its strong profitability and solid balance sheet, the company raised its dividend by 50% for 2022. CNQ will pay a $2.00 dividend this year, but a $3.00 per share in 2019.
Due to record-breaking oil prices, Q2 earnings could see a steeper increase in earnings growth. Investors might also see higher dividends and a rallying stock. Even if oil prices drop significantly, dividends from CNQ appear safe and unlikely be trimmed.
Canadian energy pipeline operator Enbridge The low correlation to volatile oil prices makes ENB a more secure bet than TSX:ENB (NYSE:ENB). ENB stock fell just 8% since its highs in recent years, surpassing oil-producing stocks.
ENB stock yields 6.2% at the moment, which is one of the highest among top TSX shares. Additionally, the stock has seen an increase in shareholder payouts over the last 27 years, which is a sign of dividend stability.
Enbridge’s stable earnings and low-risk business model facilitates consistently growing dividends. Because of its fixed-fee contracts, Enbridge’s cash flows are not affected by fluctuations in oil and gas prices. Investors can therefore expect a 5-7% annual increase in their dividends.
ENB is not the best choice if you are looking to participate in an oil price rally. ENB might be the right choice if you want to earn steady, increasing dividends and lower risk.