Better RRSP Buy: Enbridge Stock or Suncor?

Enbridge and Suncor are off their 12-month highs. Is now the right time to buy?

| More on:
Investor wonders if it's safe to buy stocks now

Source: Getty Images

Enbridge (TSX:ENB) and Suncor (TSX:SU) are major players in the energy sector. As fuel demand rebounds from the pandemic slump investors are wondering which TSX energy stock might still be undervalued and good to buy right now for a self-directed Registered Retirement Savings Plan (RRSP) portfolio.


Enbridge is known for its vast oil pipeline infrastructure in Canada and the United States. The company moves nearly a third of the oil produced in the two countries. Enbridge also has natural gas transmission lines, storage, and distribution operations. Export facilities and renewable energy assets round out the portfolio.

Enbridge trades near $51 per share at the time of writing compared to more than $59 last summer.

The stock is down from the 12-month high, despite a solid financial performance last year and good guidance for 2023. Enbridge generated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $15.3 billion in 2022 compared to $14 billion in 2021. Management expects 2023 adjusted EBITDA to be at least $15.9 billion, so the outlook is positive for this year.

The board raised the dividend by 3.2% for 2023. This is the 28th consecutive annual dividend hike. At the time of writing, investors can get a 6.9% dividend yield.


Suncor is reaping the benefits of a rebound in oil prices and the recovery in fuel demand, but the stock remains out of favour. The company upset investors when it cut the dividend by 55% early in the pandemic. Safety issues, pressure from an activist investor, and management changes have also likely kept investors on the sidelines.

Suncor trades near $44 per share. This is close to where the stock traded right before the pandemic. Several of its peers, however, have seen their share prices rise as much as 100% from their early 2020 levels.

Oil prices are off the 12-month highs, and investors should anticipate ongoing volatility. However, Suncor’s share price might be oversold. The company used the cash windfall over the past two years to increase the dividend to a new all-time high. Suncor also reduced debt and repurchased a large chunk of stock. A new chief executive officer was recently announced, and Suncor has completed a strategic review of its operations. Non-core assets are being monetized, but the integrated structure that includes production, refining, and retail assets will remain in place to capitalize on the rebound in fuel demand.

Airlines are ramping up capacity and corporations are calling commuters back to the office. Oil bulls expect market conditions to be tight in the next few years and predict West Texas Intermediate oil to return to US$100 per barrel.

At the time of writing, Suncor stock provides a 4.7% dividend yield.

Is one a better RRSP pick?

Enbridge and Suncor pay attractive dividends that should continue to grow in the coming years. Enbridge is probably the safer bet, while Suncor likely offers more upside potential if oil bulls prove to be correct in their outlook for oil prices.

I would probably make Enbridge the first choice today for the high yield and reliable dividend growth, but both stocks appear cheap right now and deserve to be on your RRSP radar.

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.

More on Investing

edit Woman calculating figures next to a laptop
Dividend Stocks

Get 25% Off This TSX All-Star Stock Today and Hold it for Life

If you're looking for a long-term hold, it doesn't get much better than this dividend stock, which is down 25%…

Read more »

funds, money, nest egg
Tech Stocks

TFSA Investors: 2 TSX Stocks for a Legit Shot at $1 Million in 20 Years

Undervalued TSX tech stocks such as Neighbourly Pharmacy can help investors to turn a $100,000 investment into $1 million in…

Read more »

analyze data

Revealed: The Canadian Stock I’ll Probably Be Buying Hand Over Fist in April

CN Rail (TSX:CNR) is a dividend-growth king that's fresh off a correction, making it my top pick for April 2023.

Read more »

analyze data
Dividend Stocks

Better RRSP Buy: BCE Stock or Enbridge Stock?

BCE and Enbridge look like cheap stocks today for RRSP investors.

Read more »

tsx today
Metals and Mining Stocks

TSX Today: Stocks on Track to End Q1 2023 in Green

The main TSX index remains on track to end the first quarter of 2023 in positive territory.

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

TFSA: 3 of the Best Canadian Dividend Stocks to Buy This Year

These three Canadian dividend stocks are some of the best to buy for the long haul and have tremendous potential…

Read more »

Young woman sat at laptop by a window
Dividend Stocks

Why I’ll Continue Drip-Feeding This Superb Dividend Stock, Recession or Not

There is a long history of this dividend stock bouncing back post recession, which is why I'll continue to drip-feed…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

TFSA Investors: Earn $60/Month With These 2 Top Dividend Stocks

BCE stock is one of two top dividend stocks that can help you achieve your tax-free income goals in your…

Read more »