Better Buy: Suncor Stock or Enbridge?

Suncor Energy Inc. (TSX:SU) stock and Enbridge Inc. (TSX:ENB) are two top energy stocks on the TSX, but I’m picking one to buy today.

| More on:
oil and gas pipeline

Image source: Getty Images

The S&P/TSX Composite Index was up 15 points in early afternoon trading on Wednesday, August 9. Meanwhile, the S&P/TSX Capped Energy Index was up 1.1% in the same trading session. Today, I want to compare two of the top energy stocks on the TSX; Suncor Energy (TSX:SU) and Enbridge (TSX:ENB). Which is the better buy in the first half of August? Let’s jump in.

The case for Suncor stock in the summer of 2023

Suncor is one of the largest integrated energy companies in Canada and one of the top oil producers on the planet. This Calgary-based company is known for its oil sands production. Shares of Suncor have jumped 9.2% month over month as of early afternoon trading on August 9. That has pushed this energy stock into positive territory so far in 2023. Investors can see more of its recent performance with the interactive price chart below.

Investors can expect to see this company’s second batch of fiscal 2023 results on August 14. In the first quarter (Q1) of fiscal 2023, the company reported adjusted funds from operations (AFFO) of $3.00 billion or $2.26 per common share — down from $4.09 billion, or $2.86 per common share, in the previous year. Meanwhile, adjusted operating earnings fell to $1.80 billion, or $1.36 per common share, compared to $2.75 billion, or $1.92 per common share, in Q1 fiscal 2022.

Western Canadian Select (WCS) price per barrel stood just above the $60 price point at the time of this writing. Meanwhile, the price of West Texas Intermediate (WTI) crude was trading at US$83 per barrel. That is still down significantly compared to its price in the previous year.

Shares of Suncor currently possess a very favourable price-to-earnings (P/E) ratio of 7.1. Moreover, the energy stock offers a quarterly dividend of $0.52 per share. That represents a very solid 4.9% yield.

Why Enbridge is a powerhouse energy stock you can’t ignore

Enbridge is the largest energy infrastructure company in North America. That means investors cannot ignore this Calgary-based energy behemoth. This energy stock has jumped 2% over the past month at the time of this writing. Its shares are still down 8.1% in the year-to-date period.

This company released its Q2 fiscal 2023 earnings on August 4. Enbridge reported adjusted earnings of $1.4 billion, or $0.68 per common share, which was mostly flat compared to adjusted net income of $1.4 billion, or $0.67 per common share, in Q2 2022. Adjusted EBITDA stands for earnings before interest, taxes, depreciation, and amortization; this metric aims to get a better picture of a company’s profitability.

The energy stock last had a P/E ratio of 26. That puts Enbridge in solid value territory compared to its industry peers. Moreover, the energy stock offers a quarterly dividend of $0.887, which represents a very tasty 7.2% yield. Enbridge has also achieved over 25 straight years of dividend increases, which makes this energy stock a Dividend Aristocrat.

Which energy stock is the better buy today?

Enbridge is a dividend beast that offers solid value at the time of this writing. However, Suncor offers terrific value, an outstanding balance sheet, a rock-solid dividend payout, and the hope for strong earnings growth going forward. Suncor is my top energy stock pick today.

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. The Motley Fool has a disclosure policy.

More on Energy Stocks

oil tank at night
Energy Stocks

Is Suncor Stock a Buy Today?

Suncor (TSX:SU) has picked up a bit of a tailwind in the past few weeks. Investors who missed the latest…

Read more »

oil and natural gas
Energy Stocks

3 Top Canadian Energy Stocks to Buy for Dividends

If you're looking for dividends in the energy sector, you can consider these names that appear to pay safe dividends.

Read more »

A solar cell panel generates power in a country mountain landscape.
Energy Stocks

2 Top Renewable Energy Stocks to Buy in August

These two top renewable energy stocks offer incredible long-term growth potential, making them two of the best stocks to buy…

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Energy Stocks

Here’s How Pembina Pipeline Stock Can Afford Its 6.4% Dividend Yield

Pembina Pipeline stock currently offers shareholders a dividend yield of 6.4%. With a payout ratio of below 60%, can PPL…

Read more »

Gas pipelines
Energy Stocks

Before You Buy Tourmaline Stock: Here’s a Dividend Stock I’d Buy First

Tourmaline (TSX:TOU) stock soared in share price, plunged, and is up again. Here's why I'd pick this dividend stock over…

Read more »

Growing plant shoots on coins
Energy Stocks

Here’s How TC Energy Can Afford to Pay You a 7.7% Dividend

TC Energy is a high-yield Canadian dividend stock that could afford to pay investors a 7.7% dividend yield over the…

Read more »

tsx today
Energy Stocks

TSX Today: What to Watch for in Stocks on Monday, August 21

The TSX Composite benchmark slid 2.9% last week to post its worst performance in 23 weeks.

Read more »

oil and gas pipeline
Energy Stocks

Here’s How Enbridge Can Afford its 7.6% Dividend Yield

Enbridge Inc (TSX:ENB) has an extremely high dividend yield. Here's how the company can afford to pay it.

Read more »