Is Enbridge Inc. or BCE Inc. a Better Dividend Stock for Your RRSP Today?

Canadian savers are searching for the best dividend stocks to add to their RRSP portfolios.

Let’s take a look at Enbridge Inc. (TSX:ENB)(NYSE:ENB) and BCE Inc. (TSX:BCE)(NYSE:BCE) to see if one is more attractive right now.


Enbridge bought Spectra Energy last year in a $37 billion deal that created North America’s largest energy infrastructure company.

Spectra added important gas assets to complement Enbridge’s focus on liquids pipelines, and it provided a nice boost to the near-term capital program. Enbridge is currently working through $22 billion in projects that should be completed through 2020. As revenue and cash flow increase, investors should see continued dividend growth in line with the historic trend.

Enbridge has increased the payout for 23 straight years at an average compound annual dividend-growth rate of 11%. The company raised its distribution by 10% for 2018.

Management recently announced deals to sell $3 billion in non-core assets as part of a strategic shift to focus on regulated businesses. The proceeds will be used to strengthen the balance sheet and help fund further development.

The stock is down from $56 a year ago to $42 per share amid concerns rising interest rates will drive up debt costs and lure investors away from go-to dividend stocks. The market is also worried about Enbridge’s long-term growth opportunities, given recent opposition to big pipeline projects.

These are valid points to consider, but the pullback looks overdone, and that’s starting to attract contrarian investors. In fact, Enbridge has already bounced more than 10% off the recent low. More gains could be on the way, and investors who step in today can still pick up a solid 6.3% yield.


BCE is also down, as investors wonder about a possible exodus out of the stock in favour of fixed-income alternatives. In addition, rising interest rates could push up debt costs and put a dent in cash flow available for dividends.

As with Enbridge, there is some merit to the concerns, but the sell-off in BCE since December might have gone too far.

The company reported steady Q1 2018 results and expects to see earnings per share and free cash flow grow through 2018. As a result, the dividend should be very safe and now provides a 5.7% yield.

At the time of writing, investors can pick up BCE for $53 per share compared to $63 last December.

Is one more attractive?

Both Enbridge and BCE should be solid buy-and-hold picks for a dividend-focused RRSP portfolio.

If you only choose one, Enbridge likely offers better dividend-growth prospects over the near term, and investors could see a nice rally on news of further non-core asset sales.

3,985 stocks listed between the TSX & TSXV, but here are the 5 we’d buy right now!

Overwhelmed by how many public companies there are to choose from in Canada? Motley Fool Canada Director of Research Iain Butler has you covered. Once a month, Iain and the rest of our team at Stock Advisor Canada reveal their five favourite Canadian stocks for new money now.

Considering they’ve walloped a “stuck in the mud” TSX by 10% over the past 4 years with truly life-changing winners like Shopify (up 236%, more than tripling your money), you’ll probably want to have your front-row seat reserved when our next five “Best Buys Now” are released – exclusively on behalf of Stock Advisor Canada members.

To make sure your name is on the list, just click here now... before the curtain is lifted without you.

Fool contributor Andrew Walker owns shares of BCE and Enbridge. The Motley Fool owns shares of Enbridge. Enbridge is a recommendation of Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.