Better Buy for Dividends: Enbridge Stock or BCE Stock?

Between BCE (TSX:BCE) stock and Enbridge (TSX:ENB) stock, which will continue to provide strong yields?

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When it comes to infrastructure, there are few that compare to the growth of oil and gas, and telecommunications. And in these sectors, the best of the bunch for growth as well as dividends has long been dividend stocks BCE (TSX:BCE) and Enbridge (TSX:ENB).

But when it comes down to choosing just one, there are a few things to look at. Let’s get into which is the best of these dividend stocks for investors to consider today.

A long-time gem

Enbridge stock has long been one of the top-performing dividend stocks for decades. The company continues to expand its operation, with its pipelines stretching across North America. It also has money stashed away so that it can continue expanding, with new and updated pipelines coming online year after year.

As for its dividend, Enbridge stock has remained committed to increasing its dividend year after year. As of writing, it currently holds a dividend yield at 6.63%. That comes out as $3.55 annually and is dished out on a quarterly basis. This dividend is up 1,135% in the last decade for a compound annual growth rate (CAGR) of 12.26%!

But what about the share price? Enbridge stock here hasn’t been so lucky, if you can call it luck. Social and environmental activists continue to push back on the building of new pipelines. The government hasn’t helped, with more investment going towards renewable energy opportunities. Now, shares are up just 15% over a decade. That’s a CAGR of just 1.42%, and it hasn’t been a smooth ride.

History to repeat itself?

Then there’s BCE stock, which has also been one of the best-performing stocks over the last 40 years, since coming on the market. Its history stretches even further back, with the Bell Company existing since the 19th century!

But the stock is what’s important here, and BCE stock has certainly outperformed its peers. The telecom company started with phones, and has expanded to mobile phones, internet connections, television, and more. And with more infrastructure being built for 5G networks across the country, including rural areas, there is indeed more room to grow.

As for the dividend, BCE stock has had similar strong performance to Enbridge stock. It’s one of the dividend stocks with a yield at 6.04%, coming out at $3.87 annually and dished out quarterly. That dividend has increased 70% in the last decade for a CAGR at 5.5%. That’s certainly less than Enbridge stock.

However, shares have done far better. BCE stock continues to hold the largest market share of the telecom companies with the fastest network as well. Even with a potentially merger on the line from its competitors, it would still hold most of it. Shares are up 35% in the last decade for a CAGR at 3.13%. That’s not enormous but certainly far more stable.

Bottom line

When it comes down to long-term growth, BCE stock has far more to go in the long and short term. There has also been just far less movement from Enbridge stock, with perhaps more bad luck coming. There is a major shift towards renewable energy, with Enbridge stock perhaps one day becoming obsolete, whereas BCE stock has far more potential for long-term returns.

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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.

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