Suncor (TSX:SU) vs. Enbridge (TSX:ENB): Which Energy Heavyweight Should You Buy Today?

Suncor Energy Inc. (TSX:SU)(NYSE:SU) and Enbridge Inc. (TSX:ENB)(NYSE:ENB) are set to release earnings in February. Which is the better buy?

| More on:
oil tank at night

Image source: Getty Images

Canada is still heavily reliant on its oil and gas sector. The COVID-19 pandemic hammered prices in this space and cratered demand. These issues were exacerbated by conflicts within OPEC, which are still ongoing. Fortunately, oil and gas prices have continued to build momentum into the early part of 2021. This is good news for Canada’s energy giants. Today, I want to compare and contrast two heavyweights: Suncor Energy (TSX:SU)(NYSE:SU) and Enbridge (TSX:ENB)(NYSE:ENB). Which is the better buy right now? Let’s dive in and find out.

The case for Suncor stock in early January

Suncor is a Calgary-based integrated energy company that specializes in production of synthetic crude from oil sands. Its shares have climbed 8.3% in 2020 as of close on January 5. The stock is down 43% year over year. Investors can expect to see Suncor’s fourth-quarter and full-year 2020 results in early February. Back in the spring of 2020, I’d suggested that investors should bet on Suncor, as it was still receiving a vote of confidence from Warren Buffett.

The company saw funds from operations rise to $1.66 billion or $0.76 per share — up from $488 million or $0.32 per share in the previous quarter. Total upstream production fell in the quarter, as Suncor tweaked its operations in the face of the pandemic. Suncor is poised to build on its third-quarter improvement, as we look ahead to Q4.

Shares of Suncor last possesses a favourable price-to-book value of 0.9. Suncor previously reduced its quarterly dividend payout to $0.21 per share. That represents a 3.6% yield.

Why Enbridge is still setting the standard

Enbridge is the second heavyweight energy stock I want to zero in on today. This is the largest energy infrastructure company in North America. Back in May, I’d suggested that Canadian investors should consider scooping up Enbridge at a discount. Its shares have increased 9.9% over the past three months as of close on January 5.

Investors can expect to see Enbridge’s fourth-quarter and full-year 2020 results by the middle of February. Unlike Suncor, Enbridge has continued to put together strong earnings in the face of the COVID-19 pandemic. In Q3 2020, Enbridge reported growth in all its core businesses. Leadership expects the company to generate DCF per share between 5% and 7% through 2022. This will support its dividend payout and debt requirements.

Shares of Enbridge last possessed a solid P/B value of 1.5. The stock last paid out a quarterly dividend of $0.835 per share. That represents a monster 7.9% yield. Moreover, the company has delivered dividend growth for over two straight decades.

Verdict: Should you buy Suncor or Enbridge today?

Suncor’s improvement in Q3 2020 was encouraging, especially as oil and gas price rebound in late 2020 and early 2021. However, I’m sticking with the dividend beast that is Enbridge today. Enbridge stock still possesses solid value, it is stable with a stellar history, and it offers a tasty dividend payout.

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.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge.

More on Investing

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.

3 TSX Stocks I’d Buy This Week

Are you struggling to find stocks to add to your portfolio this week? Here are my three top picks!

Read more »

Target. Stand out from the crowd
Dividend Stocks

3 Oversold Stocks to Buy for Passive Income

These three oversold stocks aren't just great right now for high passive income, but provide exposure to high-growth industries.

Read more »


3 Stocks to Hold in Your TFSA for Easy Tax-Free Income

Telco stocks like BCE Inc (TSX:BCE) offer high dividend income -- especially when held in a TFSA!

Read more »

Hand arranging wood block stacking as step stair with arrow up.

Why Shawcor (TSX:SCL) Stock Jumped 9% in September

Shawcor Ltd. (TSX:SCL) stock has rallied off big gains after announcing that big changes may be ahead over the next…

Read more »

Mature financial advisor showing report to young couple for their investment
Bank Stocks

Retire Young: How to Turn a TFSA or RRSP Into $1 Million

Here’s how you can turn your TSFA or RRSP into $1 million or more to plan your early retirement.

Read more »

A person holds a small glass jar of marijuana.
Cannabis Stocks

Cannabis Stocks Jump: What Investors Need to Know

Cannabis stocks have started to recover in recent weeks, showing there might be signs that now is the time to…

Read more »

money cash dividends
Dividend Stocks

TFSA Passive Income: Invest $30,000 to Earn $500,000 + $7,800 in Tax-Free Dividends

Make the power of compounding work for you and turn a $30,000 investment into $500,000 in the next 20 years.

Read more »

Online shopping
Tech Stocks

Why Shopify Stock and Other Tech Stocks Jumped on Tuesday

Shopify (TSX:SHOP) stock and others started climbing on Oct. 4, but will the rise continue or fall back?

Read more »