Natural Resources: A Classic Canadian Coin
The fact that the Omaha Oracle is looking at natural gas should be encouraging to Canadians. This decision suggests that natural gas could be upgraded from now on. TSX investors may therefore want to take a look at similar names on this side of the border. Luminaires such as Algonquin Power & Utilities should match the invoice (TSX: AQN) (NYSE: AQN).
And while oil prices have weighed on pipeline stocks, names like Enbridge may present themselves for the green team in the years to come. With its large natural gas segment and its presence in the green energy sector, Enbridge (TSX: ENB) (NYSE: ENB) may be watching for future moves in a more sustainable direction.
Indeed, comparing AQN and Enbridge at the moment reveals interesting parallels. AQN is in the gas distribution sector, although it also generates energy from hydroelectric, wind, solar and thermal sources. Enbridge’s revenues come mainly from its pipeline segment, although gas accounts for a considerable 40% segment. Renewable energies represent around 5% of its distribution.
Two high yield TSX 60 stocks
Passive income is the name of the game when it comes to investing in long-term, low-risk stocks. A recovery in natural gas prices also constitutes a solid thesis of long-term capital appreciation. Enbridge scrapes the itch for performance, with a rich dividend of 7.8%. AQN offers a 4.8% lower dividend yield. However, this level is rich enough, falling just below the 5% requirement that characterizes many long-term income portfolios.
But what proportion of these percentages come from market losses? Compare the price movements of each of these TSX 60 stocks over the past year. In 12 months, Enbridge lost 13.3%. Meanwhile, AQN has gained 10.7% since that time last year. Investors who buy rich returns should also ensure that distributions are increased by the potential for dividend growth and supported by comfortable distribution ratios.
But while investors may want to rethink their exposure to natural gas, there may be only the latest move from Berkshire Hathaway. Dominion is positioning itself as a real player in wind, solar and natural gas in the regulated space of public services. Therefore, investors may also want to take into account the “green economy” element. From Bill Gates to Jim Cramer, renewable energy is a global megatrend with large donors.
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The crazy contributor Victoria Hetherington has no position on any of the titles mentioned. The Motley Fool owns shares and recommends Berkshire Hathaway (B shares) and Enbridge. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: short calls from September 2020 to $ 200 on Berkshire Hathaway (B shares), short actions to January 2021 $ 200 on Berkshire Hathaway (B shares) and long calls to January 2021 at $ 200 on Berkshire Hathaway (Actions B).