Which ASX energy stock to own: Origin or APA Group?

These 2 ASX energy stocks have quietly regained favour in the past year as investors hunt for income with resilience.

After lagging high-growth sectors, Origin Energy Ltd (ASX: ORG) and APA Group (ASX: APA) both benefited from easing inflation fears, firmer energy demand and a renewed focus on dependable cash flows. Origin’s share price ascended 7.5% over 12 months, while APA Group gained 32% in value.

So which ASX energy stock looks better placed from here.

Origin Energy Ltd (ASX: ORG)

This $20 billion ASX utility stock offers investors a blend of income and growth. The company has benefited from strong performance across its energy markets and gas operations.

Origin’s stake in Octopus Energy adds a long-term growth lever beyond Australia. Management has also leaned into batteries and renewables, positioning the ASX energy stock to remain relevant as the energy transition accelerates.

That momentum has translated into improved earnings and a reinstated fully franked dividend of around 5%, which currently delivers a competitive yield for a utility stock. The upside is clear: if operating conditions remain supportive, the ASX energy stock can continue to grow profits while rewarding shareholders.

The risk, however, is that much of the good news may already be priced in. After a sharp rally, the valuation looks fuller, leaving less room for disappointment. Origin is also more exposed to energy price volatility and regulatory intervention, particularly in retail markets where margins can tighten quickly.

Most brokers see the ASX energy stock as a hold. The average 12-month price target is set at $12.16, a potential gain of 9% at the current share price.  

APA Group (ASX: APA)

APA Group sits at the other end of the spectrum. It owns and operates critical gas and energy infrastructure, with long-dated contracts that generate stable and predictable cash flows. This makes APA one of the most defensive ASX energy stocks, appealing to investors prioritising income and capital preservation.

Its dividend yield remains one of the highest in the sector – 6.8% at the time of writing – and distributions are supported by infrastructure assets that are difficult to replicate. Gas may be politically contentious, but it continues to play a vital role in Australia’s energy system, giving the $12 billion ASX energy share a strategic edge during the transition to renewables.

The trade-off is growth. APA’s earnings profile is steady rather than exciting, and that has been reflected in its share price.

Analysts don’t see much upside for the ASX energy stock in the next 12 months. The average price target of $8.65 is below the current share price of $8.87.

Foolish Takeaway

In the end, the better energy stock depends on what an investor values most. APA looks better suited to those seeking reliable income and lower volatility. Origin, while riskier, offers stronger growth potential and a more dynamic earnings outlook.

For income purists, APA may win. For investors chasing total returns, Origin could still have the edge.

The post Which ASX energy stock to own: Origin or APA Group? appeared first on The Motley Fool Australia.

More reading

• The best Australian dividend stocks to buy and hold forever
• 3 safe ASX dividend shares for low-risk investors
• Why analysts say Hub24, New Hope, and Xero shares are buys
• Got $5,000? 5 ASX income shares to buy and hold forever
• How to build income on the ASX without losing sleep at night

Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Apa Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.