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The Best Dividend Opportunities in the Energy Sector

Oil and gas firms Enbridge and TransCanada both expect to grow their dividends through 2020 and 2021.

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Joe Gemino: Some of our best energy dividend growth stocks are among some of our top calls in the sector. 

Five-star rated wide-moat Enbridge offers 50% upside and also gives investors an attractive 6.3% yield. More impressively, we think that the company will meet its planned 10% annual dividend growth through 2020. Enbridge sports a near-term CAD 22 billion in commercially secured capital projects in its growth portfolio, which is highlighted by the Line 3 replacement project. We expect the growth portfolio to generate almost CAD 4 billion in incremental EBITDA, which will support the dividend growth with a healthy distributable cash flow ratio of 1.4 times the dividend, which is more than enough buffer.  

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Joe Gemino does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.