Enbridge vs. Suncor: Which Energy Stock Is the Better Buy Before Christmas?

Enbridge Inc. (TSX:ENB)(NYSE:ENB) and Suncor Energy Inc. (TSX:SU)(NYSE:SU) are two energy stocks worth considering during the holidays.

| More on:
energy industry

Image source: Getty Images

Canada’s energy sector has been on a tear since the beginning of 2021. The domestic and global recovery led to improved demand in the oil and gas sector. However, tight supply kept prices very high. This has been a drag for consumers, but oil and gas producers have thrived. Today, I want to look at two top Canadian energy stocks: Suncor (TSX:SU)(NYSE:SU) and Enbridge (TSX:ENB)(NYSE:ENB). Which is the better buy before the new year? Let’s jump in.

Why Suncor looks like the better bet before the new year

Earlier this month, I’d recommended Suncor as a top energy stock to snatch up before the holidays. Shares of Suncor have climbed 41% in 2021 as of close on December 16. The stock has slipped 6% in the month-over-month period.

Suncor released its third-quarter 2021 earnings on October 27. The company was powered by improved results in the Refining & Marketing business. Moreover, it reported a strong turnaround at Oil Sand Base. Funds from operations increased to $2.64 billion, or $1.79 per common share — up from $1.16 billion, or $0.76 per common share, in the previous year. The company posted upstream production of 698,600 barrels of oil equivalent per day (boe/d) compared to 616,200 boe/d in Q3 2020.

The company hiked its quarterly dividend back to $0.42 per share for the first time since the pandemic forced Suncor to slice it in half in 2020. That represents a strong 5.5% yield. Shares of this energy stock possess a favourable price-to-earnings (P/E) ratio of 18.

Enbridge is a dividend stock that packs a punch and has history on its side

Enbridge is one of the 10 largest Canadian companies by market cap. It is also the largest energy infrastructure company in North America. Back in April, I’d suggested that investors look to snatch up this dependable heavyweight energy stock. Enbridge stock has increased 16% in the year-to-date period. Shares have dipped 5.8% month over month.

The company credited improved demand back to pre-pandemic levels for its strong Q3 and year-to-date earnings. In its Liquids Pipelines segment, Enbridge completed the Minnesota leg of its Line 3 Replacement Project. Moreover, it acquired the Ingleside Energy Center in the third quarter. Enbridge is building momentum, and it still boasts a massive project pipeline.

Adjusted earnings in the year-to-date period were reported at $4.17 billion, or $2.06 per diluted share — up from $3.76 billion, or $1.86 per diluted share, in the first nine months of 2020.

In Q3 2021, Enbridge announced a quarterly dividend of $0.835 per share. That represents a very attractive 7.2% yield. Moreover, the company has achieved dividend growth for a quarter-century. Enbridge stock last had a P/E ratio of 16, putting this energy stock in favourable value territory.

Which is the better buy?

Both top energy stocks are worth snatching up on the dip in the middle of December. However, I’m more inclined to snag Enbridge as a potential defensive play with volatility picking up on the domestic and international front.

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 recommends Enbridge.

More on Energy Stocks

exchange traded funds
Energy Stocks

3 Sector-Specific ETFs to Consider

Exposure to a specific sector doesn’t make sense from a diversification perspective, but it is often a good way to …

Read more »

grow dividends
Energy Stocks

1 Small-Cap Energy Stock Could Raise Dividends 6 Times by 2023

The Omicron variant is a threat, but should not cause a significant erosion in oil demand say energy bulls. Rafi …

Read more »

green power renewable energy
Energy Stocks

Are These 2 Undervalued Green Energy Stocks the Best to Buy Now?

As most investors know, this market environment, with stocks selling off significantly, is the best time to buy high-quality companies …

Read more »

oil and gas pipeline
Energy Stocks

Why Obsidian Energy Stock Is up Over 17% This Week

What happened? While tech stocks have continued to teeter lately, energy names have been unstoppable. The small-cap names among them …

Read more »

Oil pumps against sunset
Energy Stocks

Oil Bull Market: 3 Top ETFs to Buy Today

Oil prices continued to gain momentum in early afternoon trading on January 26. The price of WTI crude was up …

Read more »

warning or alert
Energy Stocks

Alert: Bank of Canada Didn’t Raised Interest Rates!

The Bank of Canada has decided not to raise interest rates after today’s policy meeting. That means the Bank of …

Read more »

oil and gas pipeline
Energy Stocks

Enbridge: 7% Yield AND Dividend Growth in One Package!

Enbridge (TSX:ENB)(NYSE:ENB) is the rare dividend stock that “has it all.” A 7% yielder that also has a very high …

Read more »

money cash dividends
Energy Stocks

4 Top Dividend Stocks to Buy Under $30

With the U.S. Federal Reserve signalling to raise its policy interest rate from March, the volatility in the global equity …

Read more »