There are two very big trends going on in the world when it comes to energy, but they might not be what you are expecting: The first is that the global population is growing. The second is that lower-income countries are moving up the socioeconomic ladder.

These two trends are what you really need to understand when looking at the clean energy transition that’s also happening right now. And when you do, you’ll understand why Brookfield Renewable Partners (NYSE: BEP) and Chevron (NYSE: CVX) are both cheap and reliable dividend stocks you’ll find attractive today.

Oil and gas are being replaced by cleaner alternatives, but slowly

The world has gone through energy transitions before, shifting from biomass (wood) to coal, and from coal to oil. What’s interesting is that, when you examine the world’s biggest sources of energy, biomass and coal are still material producers of power, despite having been dethroned as the main source by other options.

Oil and natural gas are No. 1 today, but that seems likely to change as clean energy demand and production grow.

But just like previous energy transitions, it is highly unlikely that solar and wind suddenly replace oil and gas. In fact, energy industry watchers largely agree that oil and natural gas will remain important for decades to come even as clean energy grows in importance.

The reason? A more populous world and higher incomes will require an all-of-the-above approach because the demand for energy grows along with the population and incomes. Demand for oil and natural gas might even increase!

So investors have two energy plays to consider. The first is to buy a company like Brookfield Renewable Partners that benefits from clean energy’s growth. The second is to buy an oil and natural gas company, like Chevron, that can continue to benefit from the still-strong underlying demand for carbon fuels. The best part? Both of these high-yield stocks look cheap right now.

Chevron has been marked down by 20%

Chevron’s stock price has fallen roughly 20% from its recent peak in late 2022. That has a lot to do with the price of oil, which has also declined over that same span. That makes complete sense because Chevron is an integrated energy company, with top and bottom lines that are heavily influenced by energy prices.

But as an integrated energy company, it also has operations in the midstream (pipelines) and downstream (chemicals and refining) sectors. Having exposure to all three helps to even out financial performance over time. It is a relatively conservative way to invest in the energy space.

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It also has a rock-solid balance sheet, with a debt-to-equity ratio of just 0.15. That would be low for any company, but for Chevron, it gives management the leeway to increase leverage when oil prices are weak to help support the business and dividend.

Highlighting Chevron’s consistency is its 37-year streak of annual dividend increases, which is pretty impressive given the inherent volatility of the energy sector.

Chevron’s stock is often most attractive when oil prices are plunging, but for conservative dividend investors, the roughly 20% drop in the stock makes it worth looking into today. Indeed, the yield is an attractive 4.3%, which is notably above the 1.2% from the S&P 500 Index and above the 3.4% of the average energy stock, using the Energy Select Sector SPDR ETF as an industry proxy. Those dividend comparisons make Chevron look attractively cheap right now.

Brookfield Renewable Partners has been cut nearly in half

Brookfield Renewable Partners might be even more interesting than Chevron, given that its units have declined a huge 47% since hitting a high-water mark in early 2021. That might seem odd given the long runway for growth in the clean energy sector, but you have to remember that Wall Street is a fickle place. Before 2021, renewable power was a hot story. And then investors got bored and moved on, despite the ongoing transition taking shape.

To be fair, competition has increased in the sector, which makes profitability harder to achieve. But Brookfield Renewable Partners is a financially strong business with a proven history of success.

The prime example of this is the distribution, which has increased by roughly 6% annually over the past 20 years. That will be music to the ears of most income investors.

Also, Brookfield Renewable’s parent company is Brookfield Asset Management (NYSE: BAM), one of Canada’s largest and most respected asset management companies. It has a long history of investing globally in the infrastructure sector. Brookfield Renewable is, really, a way for small investors to partner up with an established industry leader in infrastructure and collect big distributions from it.

The one caveat here is that, given the asset management approach, Brookfield Renewable Partners has a history of actively buying and selling clean energy assets. This business is not operated like a typical regulated utility, which means you’ll probably want to track it fairly closely.

But with Brookfield’s lofty 5.5% distribution yield, that extra work will be well worth the effort. Note that the average utility, using the Utilities Select Sector SPDR ETF as a proxy, is only yielding 2.7% today. That makes Brookfield Renewable Partners look incredibly cheap.

Cheap and reliable

If you are thinking about adding some out-of-favor dividend payers to your portfolio, look no further than Chevron and Brookfield Renewable Partners. Both look cheap today when you compare their yields to other alternatives. And, despite being at opposite ends of the clean energy revolution, both have long-term income appeal.

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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Brookfield Asset Management and Chevron. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.

2 Incredibly Cheap and Reliable Dividend Stocks With Yields Up to 5.5% to Buy Now was originally published by The Motley Fool