2 TSX Stocks I’d Buy Over Enbridge

Barrick Gold (TSX:ABX) and another stock that seem too cheap to ignore, even compared to a yield-heavyweight like Enbridge (TSX:ENB).

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Enbridge (TSX:ENB) stock is a magnificent passive income pick for Canadian investors seeking to get the best of both worlds (dividend growth and yield). However, after a trio of acquisitions from Dominion Energy, the debt load seems to be getting a tad larger.

Of course, I am a fan of the deal from a long-term perspective. That said, I’m not so sure if such deals were well-timed, given where rates are at and where they’re headed. Indeed, leverage can really act as a double-edged sword. Personally, I don’t think Enbridge will get into too much trouble, even if it did overextend itself by a bit with its recent Dominion deals.

At writing, shares of ENB yield around 8%. That’s a safe 8%, given management’s track record of keeping its payout intact through even the harshest conditions. Though the firm can keep paying its dividend (with annual raises) while paying back any debt, the stock seems to be stuck in another one of its ruts. And if a recession hits harder than expected, Enbridge stock could potentially retest the lows of 2020. In such a scenario, the dividend yield would swell to absurd levels.

In any case, there are more enticing dividend plays I’d rather pick up at this juncture, some of which may fare better in a stormy environment of high rates.

Barrick Gold

Gold is a great hedge against a rainy day, even though it may not make you all that rich compared to stocks over the long term. Barrick Gold (TSX:ABX) is a better way to play the precious metal than physical bullion, in my opinion. Sure, gold miners are going to be more volatile. However, low production costs and efficiencies, I believe, translate into a better long-term bet for investors seeking to expose themselves to gold for many years, if not decades, at a time.

Though gold has had a solid run in recent months, Barrick remains down big-time from its high, just shy of $40. At $22 and change, ABX stock also boasts a 2.43% dividend yield. With physical gold, you’ll get no dividends. So, if you seek a way to hedge your bets while getting paid to do so, ABX stock stands out above the crowd in the precious metals scene.

Onex

Onex (TSX:ONEX) is an under-the-radar investment manager that you’ve probably never heard of. The $6.3 billion market cap makes it a relative lightweight in the industry. Still, it’s a mistake to overlook the name, especially as it continues to recover ground lost in early 2022.

At writing, shares are up over 20% year to date. I think there could be more room to run, as the firm looks to hit new targets, even in today’s rumbly market environment. Recently, the firm noted it’d fail to hit its previous 2026 target it put in place back in 2021. Indeed, disappointing. But with a new target in the face of rough headwinds, I do think Onex is setting itself up for success at a later point down the road.

Indeed, it’s far better to underpromise and overdeliver than the other way around!

At 0.55 times price-to-book (P/B), Onex stock also looks dirt-cheap for what you get.

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 Joey Frenette 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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