2 Canadian Large-Cap Stocks To Buy and Hold Forever

Why retirees and long-term investors can consider investing in Enbridge and TC Energy right now.

| More on:

Energy stocks can be considered risky additions to a portfolio during a crisis. A hint of a recession or global turmoil generally sends their prices crashing down. However, there are some stocks that are capable of great resilience in turbulent times.

Today we’ll look at two such stocks.

Large-cap pipeline stocks are safe investments because they already have a solid, existing business. The entry barriers to this industry are high, and if you are not an incumbent it is very difficult to break into this space. As long as companies transport oil and natural gas through pipelines (the cheapest mode of transport compared to rail and road), established pipeline companies will continue to make money.

I wrote about Enbridge (TSX:ENB)(NYSE:ENB) back on September 27, 2019, telling investors to pick up this stock because it was going cheap at $47.78.

In the four months since, Enbridge has been steadily climbing up the charts and now trades at $52.17 for an increase of 9.2% in five months. If you add the dividends that the company declared, your gains would be in the double digits.

Enbridge is one of the safest buys in the market today. It’s the largest pipeline company in Canada and a Dividend Aristocrat that has consistently increased dividends over the last 24 years. The company makes money irrespective of oil prices going up or down.

Sixteen analysts track this stock, and not one of them gives it a rating of below ‘hold’ on Enbridge. While the average target price over the next 12 months is $55.27, I would go out on a limb and say that Enbridge might just hit the higher side of the most optimistic price target that stands at $65. Accounting for a solid dividend yield of 6.2%, we can see why Enbridge continues to be an investor and analyst favourite.

TC Energy another large-cap safe house

The second stock to consider is TC Energy (TSX:TRP)(NYSE:TRP), a pipeline stock with a market capitalization of $64 billion. The company has beaten earnings expectations handsomely for the last four quarters, and it looks like it will repeat that feat when it declares annual results for 2019 on February 12, 2020.

TC Energy completed projects worth $7 billion in 2019. The revenues from these projects will ensure that the company meets its dividend growth targets of between 8% and 10% every year until 2021.

TC Energy is a Dividend Aristocrat that has continuously grown its dividends for the last 19 years. Currently, the dividend yield for TC Energy is 4.38%. With a payout ratio of 68.5%, we can see that the company has enough room to continue to increase dividend payments.

It continues to work on more than $20 billion of projects under development, including Keystone XL and the refurbishment of another five reactors at Bruce Power as part of its long-term life extension program.

TC Energy also made significant progress in funding its capital program during the third quarter of 2019 as it completed the partial monetization of the Northern Courier pipeline in Alberta as well as the sale of certain Columbia Midstream assets in the Appalachia region.

TC Energy has entered into an agreement to sell natural gas-fired power plants in Ontario. These initiatives, combined with the sale of the Coolidge Generating Station, which closed in May, are expected to result in combined proceeds of approximately $6.3 billion.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool owns shares of and recommends Enbridge. Fool contributor Aditya Raghunath has no position in any of the stocks mentioned.

More on Energy Stocks

construction workers talk on the job site
Energy Stocks

This Canadian Stock Could Double Even During Market Volatility

While growth stocks ride volatility, this dependable, dividend-paying stock could double your money over time.

Read more »

A worker overlooks an oil refinery plant.
Energy Stocks

What Are Some Good Energy Stocks to Buy Now?

Cenovus Energy (TSX:CVE) and another great oil bet that could pay huge dividends.

Read more »

A worker overlooks an oil refinery plant.
Energy Stocks

Suncor Energy: Buy, Sell, or Hold in July 2025?

Suncor is up 17% in the past three months. Are more gains on the way?

Read more »

Hourglass and stock price chart
Energy Stocks

I’m Buying This Dividend Stock During a Dip for Lifetime Income

Looking for dividend-paying utility stocks for predictable returns and steady growth? This is one of the most reliable names in…

Read more »

rising arrow with flames
Energy Stocks

3 TSX Energy Stocks Ready for the Next Oil Bull Market

Wondering how to best play a resurgence in TSX energy stocks? Here are three of the best stocks to buy…

Read more »

oil pump jack under night sky
Energy Stocks

1 Magnificent Canadian Energy Stock Down 21% to Buy and Hold for Decades

Canadian Natural Resources (TSX:CNQ) stock is down, but investors shouldn't give up on the name just yet.

Read more »

canadian energy oil
Energy Stocks

Cenovus Energy: Buy, Sell, or Hold in July 2025?

Cenovus has erased its April losses. Are more gains on the way?

Read more »

dividends can compound over time
Energy Stocks

1 Magnificent Canadian Energy Stock Due for a Major Rebound

This energy stock isn't going to surge overnight, but it could provide decades of stable income.

Read more »