Having increased its dividend 34 times over the past 33 years, Essential Utilities has demonstrated a strong commitment to returning capital to shareholders. And the increases are not mere drops in the bucket either. From 2015 to 2024, Essential Utilities has grown its dividend at a compound annual growth rate (CAGR) of 7%. While it’s impossible to know the future, it seems likely that future dividend growth is also on the cards, as earnings per share for management projects to grow at a CAGR of 5% to 7% from 2025 to 2027. As the company operates primarily in regulated markets: – About 99% of earnings come from regulated water and wastewater operations — investors can be confident that the company will meet the management projections.

With Essential Utilities shares changing hands at 12.4 times operating cash flow, a discount to its five-year average cash flow multiple of 17, today seems like a good time to click the button purchase of Essential Utilities shares.

Daniel Foelber (Equinorus): Norwegian energy giant Equinor was the worst-performing integrated oil major in 2024.

Equinor and other major Europeans now have less expensive valuations than ExxonMobil i Chevron.

Part of the reason Equinor in particular can be so cheap is because of changes to its capital return program and investments in renewable energy.

Over the past three years, Equinor investors have enjoyed a regular dividend as well as additional dividend payments. Payouts have been massive, the latest at $2.80 per share in 2024, representing a return of more than 10%. At the same time, Equinor bought back shares aggressively, reducing its share count by 15.6% over the past three years. In total, Equinor returned more than $14 billion to investors through dividends and buybacks in 2024.

Equinor had always made it clear that a capital return program of this scale was not sustainable in the long term. Rather, the company used huge profits to pay down debt and return capital to shareholders. But it still plans to return $8 billion to $10 billion to investors by 2025, including $4 billion to $6 billion in buybacks and $0.02 per share increases in the ordinary dividend. So even without the extra juice of the special dividend, Equinor still has a yield of 5.5%.

Equinor has been building its renewable energy portfolio, led by offshore wind. The Norwegian continental shelf is ideal for offshore wind projects. Elsewhere, Equinor has been involved in leases around the world, including the US East Coast. On 23 December, Equinor completed a 10% stake in the Danish wind giant Orsted. The stake is valued at $2.3 billion, but Equinor paid a weighted average price that is 14.4% higher than the current share price at the time of writing. Wind will be an integral part of helping Equinor achieve its carbon reduction targets. However, the wind industry has suffered a downturn, which is likely hurting the short-term investment thesis in Equinor.

Even so, the company stands out as a balanced energy stock for 2025. Equinor has been exploring and producing North Sea oil and gas for decades. It is highly profitable and now sports an incredibly healthy balance sheet with more cash and cash equivalents than long-term debt. Valuation and performance are compelling, especially relative to other majors.

However, investors looking for more of an oil and gas focus may want to consider a big American like ExxonMobil or Chevron, as these companies are putting capital to work to expand their oil and gas production portfolios and reduce their average production costs per barrel. Equinor also continues to invest in new global oil and gas projects, but does not yet have such an attractive acreage.

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Daniel Foelber has positions in Equinor Asa and has the following options: February 2025 short $26 Equinor Asa calls. Lee Samaha has no position in any of the stocks mentioned. Scott Levine has no position in any of the aforementioned stocks. The Motley Fool has positions and recommends 3M and Chevron. The Motley Fool recommends BP, Equinor Asa and Ørsted A/s. The Motley Fool has one disclosure policy.

3 Dividend Stocks That Are Too Cheap to Ignore and Worth Buying in 2025 was originally published by The Motley Fool