Enbridge Stock vs. TC Energy: Better Buy for Dividends?

Both Enbridge (TSX:ENB)(NYSE:ENB) and TC Energy (TSX:TRP)(NYSE:TRP) stocks offer appetizing dividend yields.

| More on:
Increasing yield

Image source: Getty Images

The stock market continues to make vicious moves, with big-tech earnings wreaking havoc on the portfolios of many. Undoubtedly, 2022 has been one of the most painful years for investors. Mad Money host Jim Cramer is nearly in tears over Meta Platforms‘ post-earnings plunge of more than 25%. Investing certainly seems like a punishing game. For those who fail to put in ample due diligence, the type of punishment doled out by Mr. Market could be severe.

For beginner investors willing to brave the carnage, though, this type of violent bear market is perfect for setting your future self up for prosperous gains. It’s really hard to go against the grain or ignore your emotion, especially if you’re down big in a position. Investing was never meant to be a euphoric endeavour. At times, it can be painful. But importantly, investors should never lose sight of the long-term picture. As someone wise once put it, it’s always darkest before dawn.

Large dividends can help investors through times like these

Though it seems like a bad time to deploy capital into any asset these days, I’d argue that now is the perfect time to get greedy while most others are hitting the panic button. With the bear market in stocks and pullback in bonds, few portfolios have been spared. Even holders of cash haven’t been left unscathed with the absurd amount of inflation that could linger into the new year.

Amidst profound uncertainties, investors should seek comfort with stocks of dividend-paying companies that can continue to make good on their commitments in times of recession. Enbridge (TSX:ENB)(NYSE:ENB) and TC Energy (TSX:TRP)(NYSE:TRP) stock are two energy firms with incredibly resilient dividends that are as growthy as they are well-covered.

Indeed, the energy patch has been a bright spot in what’s been a dire year for nearly everything else. As the page turns on the year and recession approaches, I’d look for such market leaders to continue holding steady.

Enbridge

Enbridge stock is a pipeline darling that can be relied upon for consistent dividend payments in most types of market conditions. The 6.5% dividend yield continues to be a draw for income investors. The stock is only down 11% (at writing) from its high. Enbridge has been a solid relative outperformer after many years of being stuck in a bear market of its own.

Though it’s impossible to tell what’s next for the energy sector, I do view the major pipeline firms as more utility-like in nature. Handsome payouts, dividend growth, and the firm’s slight push into renewable power projects are all great reasons to pay up a lofty 22 times trailing price-to-earnings (P/E) multiple in this rocky environment.

Enbridge may not be cheap. But with a resilient operating cash flow stream and some of the most shareholder-friendly people at the helm, the stock is definitely worth considering. Of most firms with yields north of 6%, Enbridge is a standout.

TC Energy

With a 5.98% dividend yield, TC Energy stock is a slightly less bountiful midstream energy firm than Enbridge. Though the yield is lower, the stock seems like a much better value at 18.9 times trailing P/E. Indeed, the recent 25% slip in the stock has made TRP a far choppier ride than the likes of an Enbridge. Regardless, TC Energy has a lot going for it, as it looks to grow further into Mexico.

Finally, TC Energy’s recent move into renewables is encouraging. The firm recently announced a $146 million investment in a Calgary-based solar power project. Such an effort may be just a drop in the bucket but marks a critical turning point for a firm as it looks to reduce its carbon footprint.

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.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge and Meta Platforms, Inc. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Growing plant shoots on coins
Dividend Stocks

Better Buy in August: Passive-Income or Growth Stocks?

With a steady mix of passive-income and growth stocks, investors can create a prime portfolio even during market volatility.

Read more »

a person prepares to fight by taping their knuckles
Dividend Stocks

3 Defensive TSX Stocks for Lower-Risk Investors

These three TSX stocks are all high-quality companies with defensive businesses, making them ideal for low-risk investors.

Read more »

ETF chart stocks
Dividend Stocks

2 Canadian ETFs to Buy and Hold Forever in Your TFSA

ETFs like iShares Canadian Quality Dividend ETF (TSX:DIV) have delivered admirable total returns.

Read more »

TFSA and coins
Dividend Stocks

How to Use Your TFSA to Earn $5,000 Per Year in Tax-Free Income

Canadian stocks like Canadian National Railway (TSX:CNR) can pay substantial amounts of dividends.

Read more »

money cash dividends
Dividend Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Here are some key reasons why this top Canadian dividend stock could continue to outperform the TSX Composite benchmark in…

Read more »

financial freedom sign
Dividend Stocks

3 Stocks to Buy Now That Could Help You Retire a Millionaire

These three stocks are all reliable and have years of growth potential, making them some of the best stocks to…

Read more »

Target. Stand out from the crowd
Dividend Stocks

This 4.1 Percent-Yielding Dividend Stock Remains a Top Choice for Passive Income

Canadian Natural Resources offers shareholders a tasty dividend yield of over 4% and has grown its dividends by 21% over…

Read more »

dividends grow over time
Dividend Stocks

1 Magnificent Dividend Stock That’s Down 10% and Trading at a Once-in-a-Decade Valuation

This dividend stock may be down around 10%, but there is a huge future opportunity for those wanting growth as…

Read more »