3 Energy Stocks You May Be Overlooking
By Matthew DiLallo | June 28, 2017 |

With hundreds of publicly traded companies in the energy industry, it's easy for investors to overlook those that aren't in the headlines every day. Because of that, many investors are missing out on compelling investment opportunities in the sector. Three such companies that don't seem to get much notice are Brookfield Renewable Partners (NYSE: BEP), GasLog Partners (NYSE: GLOP), and Phillips 66 Partners (NYSE: PSXP). That's a shame because each offers an excellent dividend yield that's likely to grow at a healthy rate in the years ahead. 

The Ignored Clean Energy Behemoth
When it comes to renewable energy, wind and solar get all the headlines these days. Because of that, most investors overlook Brookfield Renewable Partners, which operates one of the largest public pure-play renewable power businesses in the world. The company currently controls 260 generating facilities that have an installed capacity of 10,600 MW, with hydropower accounting for 88% of that capacity, followed by wind at 11%. 

What's important to note about that portfolio is that Brookfield Renewable Partners has secured 92% of the cash flow generated by its assets under long-term contracts. Those contracts have an average remaining life of 17 years and provide inflation-linked upside. With more than 70% margins and low sustaining capital needs, Brookfield also generates robust free cash flow, 70% of which it distributes to investors each year, leading to an eye-catching 6.2% current yield. The company reinvests the balance to build new hydro and wind plants, which along with other factors, should drive 5% to 9% annual earnings growth over the long term, enabling the company to increase the payout by a similar rate. It's a formula that Brookfield Renewable Partners anticipates will fuel double-digit total annual returns in the years ahead, which is upside potential that investors won't want to miss.

---Sponsored Link---
The 10 Best Stocks To Buy Now
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market. David and Tom just revealed what they believe are the ten best stocks for investors to buy right now. Click here to learn about these picks!

Cashing In On The Growing LNG Trade
With climate change worries continuing to grow, the world is not only increasingly turning to renewables but cleaner burning natural gas to help keep emissions at bay. However, because renewables grab the headlines, investors tend to overlook just how quickly gas demand is expected to grow. The International Energy Agency, for example, anticipates that demand will increase 50% by 2040, calling it a big winner along with renewables in the years ahead. That said, volatile gas prices can cause investors to ignore this trend, which leads many to miss the fact that it is fueling the need for new LNG tankers to transport the gas to demand centers. One of the companies positioned to capture this growth is GasLog Partners.

The company currently owns 10 vessels chartered to Royal Dutch Shell (NYSE: RDS-A)(NYSE: RDS-B) under fixed-fee contracts. So, GasLog Partners has no commodity price or volume risk and instead collects predictable cash flow from these contracts. That stable cash flow enables GasLog Partners to pay a very nice 9% current yield. 

Overall, the company distributes about 85% of its cash flow to investors, reinvesting what it retains along with new debt and equity to acquire additional LNG vessels from its parent company GasLog (NYSE: GLOG), which provides the latter with money to order more boats. This formula has enabled GasLog Partners to keep pace with its plans to increase the distribution by a 10% to 15% compound annual rate from its IPO through the end of this year. Meanwhile, with several more dropdown candidates remaining at GasLog, and increasing gas demand on the horizon, that growth should continue in the years ahead.

A Growing Pipeline Partnership
Phillips 66 Partners is a more traditional energy company compared to the others on this list. But instead of producing oil and gas, it transports and stores it, collecting fees along the way. That said, because of its smaller size, many investors don't pay much attention to Phillips 66 Partners, despite the fact that 100% of its revenue comes from fees and it yields a generous 5.1%, which, thanks to its stable cash flow and conservative financial profile, is on rock-solid ground.

Aside from that compelling current income stream, Phillips 66 Partners offers investors healthy income growth, driven by the expectation that it will increase its payout by a 30% compound annual growth rate through 2018. Backing that plan will be additional dropdown transactions from its parent, Phillips 66 (NYSE: PSX), and growth projects it has under underway. Meanwhile, the company is working on extending that growth past 2018, recently announcing the potential to develop a new unit at one of its parent's refineries that could start construction later next year. Projects like these, which are entirely underpinned by long-term fee-based contracts, support the view that Phillips 66 Partners can continue to steadily increase cash flow and its distribution, making it an excellent investment for the long term.

Investor Takeaway
These three companies have a few things in common. First, they operate businesses that generate predictable cash flow because long-term contracts reinforce their assets. That stable cash flow enables them to pay healthy distributions to investors and invest in growth projects that increase cash flow. It's a formula that should yield excellent long-term returns, which is something that no investor would want to miss. 

This article originally appeared on The Motley Fool.