Reviewed by Gotrade Internal Analyst
Gotrade News - Dividend income is back in the conversation as the energy sector’s yield is cited at 3.3% versus the S&P 500’s 1.1% average. A new The Motley Fool note points to Brookfield Renewable and Enbridge as two high-yield names with room to keep growing payouts.
Key Takeaways:
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Energy is cited as the S&P 500’s second-highest dividend-yielding sector at 3.3% versus a 1.1% index average.
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Brookfield Renewable leans on long-term power contracts, many linked to inflation, to support its dividend.
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Enbridge relies on contract and regulated-rate cash flows, plus a large project backlog, to sustain dividend growth.
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The setup matters because markets often reward businesses with visible cash flows when growth outlooks get choppy. For income investors, the sweet spot is a solid yield backed by predictable earnings power.
Why energy and renewables are showing up on dividend screens
The note frames energy as a standout for yield, with the sector cited at 3.3% in the S&P 500. The point is less about short-term price moves and more about cash flow durability.
Renewables can fit that income narrative when revenue is locked in via long-term power purchase agreements. Those contracts can make returns feel steadier than the typical boom-bust view of energy.
What Brookfield Renewable and Enbridge are offering
Brookfield Renewable is described as a global renewable power producer that sells most output under long-term, fixed-rate PPAs. About 90% of its power is cited as contracted for an average term of 13 years.
A key detail is inflation linkage. Roughly 70% of revenue is cited as tied to inflation-adjusted pricing, which can help cash flow keep up when costs rise.
On growth, the company’s playbook includes repricing as legacy contracts roll off, developing new renewable projects, and acquisitions. It also expects funds from operations to grow at more than 10% annually through 2030.
That growth outlook supports a plan to raise dividends by 5% to 9% per year, based on the same note. It also cites a track record of at least a 5% dividend increase for 14 straight years.
Enbridge is positioned differently. It’s described as one of North America’s largest energy infrastructure operators, spanning oil and gas pipelines, a major gas utility business, and a growing renewables portfolio.
The income appeal comes from stability. About 98% of annual earnings are described as underpinned by long-term contracts and regulated rate structures, supporting a cited 5.8% dividend yield.
Enbridge also points to a multi-billion-dollar project backlog expected to enter service through the end of the decade. Its outlook calls for cash flow per share growth around 3% through this year, then closer to 5% annually from 2027 and beyond.
For global investors, the practical takeaway is to separate renewable producer risk from infrastructure toll-road risk. Rates, inflation dynamics, and regulation can shift the relative appeal of each dividend profile.
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