How these 2 dividend beasts can help pay high energy bills (huge yield)
If you’re like me, you’ve been absolutely smoked by rising energy costs this year.
While there’s not a lot you can do about that short of reducing your energy usage — and that’s probably always a good idea — there is a roundabout way to help cover those bills while building investment wealth over time.
That way is this: If you’re forced to pay the electric company to keep the lights on or the natural gas company to heat your hot water tank, why not buy some shares in those companies and put a few bucks back in your pocket?
I will tell you about a couple of dividend beasts I personally own, and then I’ll tell you how you might apply this lesson to your own situation.
Keep in mind I’m not a financial advisor and this isn’t financial advice — I just like talking about investing and trade ideas. You need to manage your own money and speak to a financial advisor if you need help.
My Golden Rule of Investing
When I buy stocks, there’s one golden rule I follow: it must be a company whose product I use at least every month.
The reasoning behind this is threefold:
- I know that when I use that company’s products or services, I’m also supporting my own investments
- The company is generating consistent cashflow from me and others, which is key for surviving a recession (which I believe is on the horizon)
- I know exactly when to sell: when I stop using the company’s products or services
This is serving me well so far.
At the time of this writing, my growth portfolio (that is, companies that don’t pay a dividend) is outpacing the S&P 500 by nearly 9 percent, and my dividend portfolio is ahead by just under 8 percent.
Sometimes I invest in companies because I love their products and services: my holdings in Google (search, YouTube, productivity apps, etc.) and Costco (retail and products) are two examples.
Sometimes I invest in companies because I’m forced to use their products and services.
Energy companies are a great example of the latter.
Do I like paying gas and electricity bills? Absolutely not! Do I have to pay them? You bet I do, at least if I don’t want my family to freeze.
The upside is that energy companies typically pay huge cash dividends that you can reinvest or, if you like, help pay your outlandish energy bills!
A natural gas powerhouse
Now let’s talk about a couple of those companies and why I invest in them in particular.
The first is Canadian energy giant Enbridge ($ENB)
Although the company is based in my home country, it does trade on the New York Stock Exchange and is available to Americans.
The company operates in five segments: liquids pipelines, gas transmission and midstream, gas distribution and storage, renewable power generation, and energy services.
The most important factor for me: I get a big bill from them every month!
Enbridge gas heats my home, my water tank, and the pots on my stove.
ENB is a blue chip Canadian stock with a $79 billion market cap and is, at the time of this writing, trading at a shade over $39 per share. The average analyst price target is $43.84.
Down 17% over the past year, its dividend yield is now an outlandish 6.67%.
I love that the company isn’t resting on its laurels and is getting into renewables too.
I think we all know heating fuel isn’t going to be around forever, but as I mentioned, if I stop using natural gas, I’ll sell my holdings.
Canadian oil giant
Look, I don’t love owning an oil company, but the simple fact of the matter is that electric vehicles are still outside of a lot of people’s price range.
Until they’re ubiquitous and the infrastructure is there, this is going to be a necessary evil.
I imagine at some point both my vehicles will be electric, but until then, I still need fuel to get around.
I get that fuel from Suncor Energy ($SU) via its Petro-Canada gas stations. At the time of this writing, Suncor has a market cap of around $42 billion, is trading at $31.85, and has an average analyst price target of $39.98.
Despite being a Canadian blue chipper, it also trades on the NYSE and has a very nice 4.8 percent dividend yield at the moment.
What companies do you use?
As I said, I only buy companies I actually use regularly.
What companies light your lights and heat your home? Are there any opportunities there? Let me know in the comments!
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The views in this article are the personal views of the author. This commentary is provided for general informational and entertainment purposes only and should not be construed as financial, investment, tax, legal or accounting advice. It does not constitute an offer or solicitation to buy or sell any securities referred to. Consult your financial advisor prior to making financial decisions.