3 Top Energy Stocks to Buy in July for Passive Income
Key Takeaways
The energy sector generates lots of cash flow. That vides companies with the money to pay big dividends. Because of that, it can be a great place to invest for...
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July 9, 2025
07:45 AM
The Motley Fool
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The energy sector generates lots of cash flow
That vides companies with the money to pay big dividends
Because of that, it can be a great place to invest for passive income
Enbridge (ENB -0. 88%), Chevron (CVX -0. 14%), and Enterprise ducts Partners (EPD 0. 57%) stand out to a few Fool
Com contributing analysts as great energy dividend stocks to buy this July for passive income
Here's what makes them ideal options for those seeking lucrative income s
Image source: Getty Images
Built to generate durable dividend income Matt DiLallo (Enbridge): Enbridge has been one of the most reliable dividend stocks in the energy sector over the decades
The Canadian pipeline and utility company has paid dividends for over 70 years
It has increased its payment every year over the past three decades
The company generates very predictable cash flows
Cost-of-service agreements and long-term, fixed-fee contracts back 98% of its earnings
Its earnings are so predictable that Enbridge has achieved its annual financial guidance for 19 years in a row
Enbridge pays 60% to 70% of its stable cash flows out in dividends
That vides a nice cushion while allowing the company to retain meaningful excess free cash flow to fund expansion jects
The company also has a strong investment-grade balance sheet
Those features vide it with billions of dollars of annual investment capacity to fund expansion jects and bolt-on acquisitions
The company currently has a multibillion-dollar backlog of commercially secured expansion jects underway
They should come online through the end of the decade
Enbridge's backlog gives it tremendous visibility into its growth
It expects to increase its cash flow per by a 3% annual rate through 2026 and by 5% per year thereafter
That fuels Enbridge's view that it can continue increasing its dividend, which yields around 6%
Enbridge's high-yielding and steadily rising dividend makes it a top energy stock to buy for passive income this month
Chevron is built to survive oil market volatility Reuben Gregg Brewer (Chevron): There are two things that income investors will want to note integrated energy giant Chevron
First, it has an attractive 4. 7% dividend yield
Second, the dividend has been increased for a whopping 38 consecutive years
Either one of these numbers alone is interesting, but together they are nothing short of impressive, given the inherent volatility of the energy sector
The long streak of dividend increases is built atop a rock-solid
Chevron has exposure to the entire energy value chain and a global portfolio of assets
This diversification helps to soften the peaks and valleys that come along with the often dramatic swings in oil and natural gas prices
This "integrated" model sits atop a balance sheet that is among the strongest in the integrated peer group, with a debt-to-equity ratio of around 0
Essentially, Chevron has the leeway to take on debt during industry downturns so it can keep funding its and its dividend
When oil prices recover, as they always have historically, it reduces leverage
CVX Debt to Equity Ratio data by YCharts The end result of Chevron's apach is a dividend that passive income investors can count on through thick and thin
The attractive yield today is related to normal volatility in oil prices (energy prices are a bit weak) and some company-specific issues (a difficult-to-close acquisition and Chevron's investment in Venezuela)
But given the strong foundation here, the high yield is bably best seen as an opportunity for long-term dividend investors to jump aboard a reliable income stock
A solid bet for passive income Neha Chamaria (Enterprise ducts Partners): If I had to pick one energy stock right now to earn passive income, I'd put my money on Enterprise ducts Partners, a company with a solid foothold in the mid energy space and an incredible dividend track record
Enterprise ducts is one of the largest mid energy companies in the U
It enjoys inelastic demand as it supplies energy infrastructure services under long-term contracts, 90% of which also have escalation clauses that mitigate the impact of inflation on Enterprise ducts' cash flows and dividends
That explains why Enterprise ducts has been able to grow its cash flows consistently over the years and increase its dividend for 26 consecutive years
It is highly ly that the company will continue to increase dividends for years to come, more so because Enterprise ducts is on a solid footing right now
This year is a significant one for Enterprise ducts, as $6 billion of the $7. 6 billion worth of capital jects that were under construction are expected to come online
Meanwhile, the company's backlog is also growing
These jects should drive Enterprise ducts' cash flows higher and support its dividend growth and yield
Given the backdrop, the stock's 6. 9% yield looks bankable and safe, making Enterprise ducts a compelling dividend stock to buy now
Matt DiLallo has positions in Chevron, Enbridge, and Enterprise ducts Partners
Neha Chamaria has no position in any of the stocks mentioned
Reuben Gregg Brewer has positions in Enbridge and TotalEnergies
The Motley Fool has positions in and recommends Chevron and Enbridge
The Motley Fool recommends BP and Enterprise ducts Partners
The Motley Fool has a disclosure policy.
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