How to beat soaring bills by investing in energy

Households are facing soaring bills as prices surge, with the annual total forecast to hit £3,615 in the new year, according to predictions from analyst Cornwall Insight. But smart investors can earn back money by buying shares in the companies that are profiting from the energy crisis.

DIY investors could secure an average return of 24pc by backing nine of London’s largest energy companies, according to data compiled by the stock analyst TipRanks.

Energy behemoths BP, Shell and British Gas owner Centrica have announced massive profits, dividend payments and share buybacks in the past week, as they have benefitted from a surging oil and gas market.

A £ 20,000 investment spread across nine energy and oil companies – BP, Shell, National Grid, Centrica, SSE, Energean, Harbour Energy, Greencoat UK Wind and Tullow Oil – could grow by £4,875 after one year, based on City analysts’ current share price targets.

Rob Burgeman, of wealth manager Brewin Dolphin, said energy companies looked very attractive for DIY investors, given the strength of the commodity market.

“But investors should be careful; they are volatile investments,” he warned. “Only two years ago, we had a negative oil price. Plus, there are political risks attached to some of these energy businesses now, with more discussion in Westminster about a windfall tax on their profits.”

Mr Burgeman said renewable energy companies could be safer for investors looking to avoid any political backlash. “A rising tide lifts all ships,” he said. “So rising power prices have been good for renewable energy businesses too, such as the Renewable Infrastructure Group and Greencoat UK Wind.”

Both are investment trusts which own a portfolio of renewable energy infrastructure assets. They have returned 1pc and 9pc respectively

£5,000 £10,000 £1,000 £5,000 £1,000 £25 £20 £1,000 £1,000 £100 £1,000 £1,000 £10 £1,500 1.80% 1.70% 1.55% 1.55% 1.50% 1.46% 1.43% 2.12% 2.10% 2.06% 2.00% 3.50% 2.50% 1.80% 3.35% 1.50% 1.45% 3.05% 3.02% 3.00% 2.75%