2 Energy Dividend Stocks With Cheap Valuations and Growing Payouts
Written by Lawrence Rothman for The Motley Fool -> It's challenging to find bargains in the energy sector given its strong price gains this year. Energy Transfer has benefited from higher volumes. Enterprise Product Partners has been investing in growth projects. The energy s
It's challenging to find bargains in the energy sector given its strong price gains this year.
Enterprise Product Partners has been investing in growth projects.
The energy sector, sensitive to crude oil and natural gas prices, has done well for investors this year due to increased commodity prices.
In particular, with oil prices skyrocketing following the launch of the Iran war earlier this year, the S&P 500 Energy sector gained 40% this year, through June 8. Energy stocks' stock appreciation easily outpaced the S&P 500 ex-Energy 's 22.9% increase.
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The rapid price gains make it challenging to find stocks in the sector trading at reasonable valuations. However, I've found two pipeline and transportation companies fit the bill.
Better still, they have high dividend yields and a history of raising payouts. That makes them attractive stock investments for their total return potential over an extended period.
Energy Transfer (NYSE: ET) transports oil and gas, including via pipelines, and stores energy, among other activities. That's a steadier business than exploration and production energy companies, whose results depend on commodity prices. Rather, Energy Transfer, while not immune to energy prices, relies more on transport volumes of natural gas and crude oil.
