Warren Buffett is one of the best guides for finding strong investments. The “Oracle of Omaha” has an approach focusing on timeless principles rather than market trends. He looks for companies with durable competitive advantages, steady cash flow, and disciplined management, businesses that can compound value for decades. And right now, the future of energy looks bright for Buffett.
Brookfield Renewable Partners (TSX:BEP.UN) is one of the most compelling Canadian energy stocks to watch right now, especially as investors like Warren Buffett increase their exposure to long-term, cash-generating assets tied to the global energy transition. Buffett has long favoured businesses with durable competitive advantages and predictable cash flow, and that’s exactly what Brookfield Renewable offers. It owns one of the world’s largest portfolios of renewable energy assets, including hydroelectric, wind, solar, and energy storage facilities on a global scale. These assets generate long-term contracted revenues, often indexed to inflation, creating steady and growing cash flow.
What makes BEP.UN especially interesting now is how closely it aligns with Buffett’s shift toward renewable and infrastructure investments. Through Berkshire Hathaway Energy, Buffett has already poured billions into renewable projects like wind farms, transmission systems, and solar power. Brookfield Renewable is essentially a “mini Berkshire” in the energy transition space, acquiring and optimizing assets globally, reinvesting its profits into new opportunities. This compounds returns for decades rather than quarters.
From a financial perspective, Brookfield Renewable offers the kind of stability and income growth that long-term investors prize. Its cash flow is underpinned by long-term contracts, most lasting 10 to 20 years. The energy stock also has a track record of increasing its distribution by 5% to 9% annually. With a yield hovering around 5.12%, BEP.UN gives investors solid income today, plus the potential for long-term growth as renewable demand accelerates.
TerraVest Industries (TSX:TVK) is one of Canada’s most under-appreciated energy stocks. It operates quietly in the background of the North American energy and industrial economy, manufacturing fuel storage tanks, pressure vessels, and processing equipment used in oil, gas, propane, and renewable fuels. The company serves sectors that remain vital even through transitions in energy sources, making it a steady, profitable player in an industry often dominated by volatility. Management has a strong record of acquiring niche manufacturing businesses that generate reliable cash flow, improving their operations, and reinvesting profits back into the business. It’s a textbook example of Buffett’s “compounding machine” philosophy: buy good businesses at fair prices, let them grow under patient stewardship, and avoid over-leveraging or overpromising.
From a financial standpoint, TerraVest offers the kind of durable profitability and shareholder discipline that Buffett’s style demands. It maintains strong margins and generates consistent free cash flow, allowing it to fund growth while paying a modest but dependable dividend. The energy stock’s payout ratio is low, which leaves plenty of room for reinvestment and future increases. And because the company is smaller and less followed by institutional investors, its stock often trades below the valuation levels of larger peers.
Beyond its financials, TerraVest’s strategic positioning in the energy transition adds another layer of appeal. While much of its business still serves the fossil fuel sector, the energy stock is expanding into equipment for renewable and alternative energy systems, including propane and renewable natural gas. This diversification keeps its products relevant as global energy systems shift toward cleaner sources. In that sense, TerraVest represents the kind of practical transition investment Buffett tends to favour: companies that adapt profitably to change rather than bet everything on unproven technology.
In short, these two energy stocks are prime opportunities for investors seeking to get into the Buffett style of investing. Not only are they strongly managed companies performing with solid balance sheets, but each also offers a stable and indeed exciting future outlook. Even now, here’s what investors could gain from $7,000 invested in each energy stock.
COMPANY
RECENT PRICE
NUMBER OF SHARES
DIVIDEND
ANNUAL TOTAL PAYOUT
FREQUENCY
TOTAL INVESTMENT
TVK
$122.75
57
$0.70
$39.90
Quarterly
$6,996.75
BEP.UN
$40.43
173
$2.10
$363.30
Quarterly
$6,993.39
So, while you collect dividends, take the Buffett method and reinvest. This compounding growth will create even more income over the long term, creating a portfolio even the Oracle would be proud of.
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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Berkshire Hathaway, Brookfield Renewable Partners, and TerraVest Industries. The Motley Fool has a disclosure policy.
