Better Buy for Passive Income: TD Stock or Enbridge?

TD Bank stock and Enbridge stock look cheap today for dividend investors.

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TD Bank (TSX:TD) and Enbridge (TSX:ENB) are long-time favourites among income investors and now trade at prices that are below their 12-month highs. Retirees and other dividend investors seeking reliable passive income are wondering which top TSX dividend stock is good to buy right now for an income portfolio.

TD Bank

TD traded as low as $78 per share last summer, as investors became increasingly concerned that a trend of rising interest rates would trigger a recession in 2023 or 2024.

Bargain hunters who bought around the middle of July are now sitting on some nice gains. TD stock has gradually moved higher over the past seven months, partly driven by reductions in inflation and ongoing strength in the jobs markets in both Canada and the United States.

The Bank of Canada and the U.S. Federal Reserve are trying to get inflation back down to 2%. The January report showed inflation at 5.9% in Canada and 6.4% south of the border. These levels are still too high, and there is a risk the central banks will be forced to push rates even higher or at least keep them elevated for longer to tame an overheated economy and ease the tight labour market. The result could be a more meaningful economic downturn than anticipated once the full effects of the rate hikes work their way through the system.

Despite the headwinds, TD expects fiscal 2023 adjusted earnings to be 7-10% above the 2022 results. This is encouraging considering the economic uncertainty. The positive outlook is partly driven by two acquisitions in the United States that are expected to close this year. The deals will make TD a top-six retail bank in the American market and bolster TD’s investment banking operations, helping to position the business for long-term growth in the United States.

TD’s compound annual dividend-growth rate is above 10% over the past 25 years. The current payout provides a 4.2% yield.


Enbridge is a giant in the North American energy infrastructure sector with vast oil and natural gas pipelines, storage facilities, export operations, and natural gas distribution utilities. The company is also expanding its renewable energy portfolio.

A rebound in fuel demand in both the domestic and international markets is expected to continue in the coming years. This bodes well for Enbridge’s transmission and export operations. The company moves 30% of the oil produced in Canada and the United States and will become a more important player in the liquified natural gas (LNG) segment in the coming years through its recent investment in the Woodfibre LNG project in British Columbia.

Enbridge is working on secured capital projects valued at $18 billion. This will help drive revenue and cash flow growth in the coming years. The company raised the dividend by 3.2% for 2023, extending the dividend-growth streak to 28 years.

The stock trades near $51.50 at the time of writing compared to $59.50 last June. Investors can now get a dividend yield of 6.9% from Enbridge stock.

Is one more attractive to buy today?

TD and Enbridge pay good dividends that should continue to grow. Enbridge offers a better yield right now for passive income while TD’s dividend-growth rate will likely be better in the next few years. Both stocks still appear undervalued, so I would probably split a new investment between the two for an income portfolio.

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 recommends Enbridge. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of Enbridge.

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