3 TSX Energy Stocks Ranked: Which Gets #1?

Canadians can stay invested in the energy sector amid the threats to oil demand. However, limit your choices to the top three: the Enbridge stock, TC Energy stock, and Suncor Energy stock.

Christopher Liew, CFA

Christopher is a CFA Charterholder and a former financial advisor at RBC.

Published August 13, 2021 2:23 pm EDT

The TSX energy sector had an explosive start in 2021, but the gains are slowly eroding. While it’s still the top performer among the 11 primary sectors, surging COVID-19 cases could slow it down. Crude prices fell 4% on August 9, 2021, the trading day after Canada’s primary stock market index posted a new record-high of 20,475.40.

In the last 30 days, the energy sector lost 11.85%. However, there’s no reason to panic. You can still count on Canada’s major oil players to endure a possible downturn. The following are the three top TSX energy stocks you must own if you want to stay invested:

1. Enbridge

Enbridge (TSX: ENB)(NYSE: ENB) is a no-brainer choice come hell or high water. The best-in-class energy stock is likely to be a core holding of most dividend investors, whether Canadian or American. The $100.03 billion company is on track to achieve its three-year plan that should solidify growth trajectory in the post-pandemic and beyond 2023.

Management believes that Enbridge’s existing infrastructure will play a key role in transporting and storing future energy supplies. President and CEO Al Monaco said, “We believe that in all practical scenarios, our assets will remain critical to supporting long-term energy demand.”

The company delivered impressive financial results in the first half of 2021 despite the industry headwinds. Its adjusted net earnings increased 6.78% to $7.04 billion versus the same period in 2020. Mr. Monaco said that through strong cash flow growth and disciplined capital allocation, Enbridge would continue to build financial flexibility to position for the future. At $49,38 per share, Enbridge pays a 6.76% dividend.

2. TC Energy

Why do you think Brookfield Infrastructure Partners fought hard to win Inter Pipeline over Pembina Pipeline? The persistent suitor wants to create an energy company similar to TC Energy (TSX: TRP)(NYSE: TRP).

TC Energy boasts one of the largest natural gas pipeline networks in North America. The $59.12 billion energy infrastructure company owns a diversified portfolio of regulated and long-term contracted assets, storage facilities, and power generation plants.

However, for veteran investors, this energy stock is their reliable income provider, regardless of the market environment. Thus far, in 2021, TRP investors enjoy a 20.09% gain. A $60.39 per share, you can partake of the hefty 5.76% dividend. Also, market analysts see a return potential of 14.26% in the next 12 months.

3. Suncor Energy

Unlike Enbridge and TC Energy, the oil price war and the global pandemic beat Suncor Energy (TSX: SU)(NYSE: SU) to a pulp. The $35.81 billion integrated company lost its Dividend Aristocrat status when it slashed dividends by 55% after Q1 2020. Today, the oil sands king is back in the good graces of investors.

As of August 9, 2021, Suncor trades at $24.12 per share and offers a 3.48% dividend. The energy stock is up 15.59% year-to-date, while market analysts recommend a buy rating. They predict the price to climb 53.86% to $37.11. The bullish sentiment stems from the company’s remarkable comeback in 2021.

In the six months ended June 30, 2021, management reported net earnings of $1.68 billion compared to the net loss of $4.13 billion in the same period last year. Industry observers agree that Suncor Energy is the must-own value stock in Q3 2021.