Dividend investing is one of the best ways to continue seeing returns on your investment, regardless of market movement, resulting in capital gains or losses. When it comes to making the most of your investment returns through dividend stocks, seeking reliable but high-yielding dividend stocks can be an excellent strategy.
While adding high-yielding dividend stocks can be beneficial, it is a decision requiring extra care when you consider individual holdings. In other words, an ultra-high-yield alone is not enough information to go on. To make a wise investment, you must dig deeper.
This is why Enbridge (TSX:ENB) and TC Energy (TSX:TRP) are high-yield energy stocks to take a closer look at, and Suncor Energy (TSX:SU) is a stock you should probably avoid. Let me explain.
Enbridge
Enbridge stock is a $99.52 billion market capitalization multinational pipeline and energy infrastructure company headquartered in Calgary.
Most investors are familiar with Enbridge stock due to its reliability. It operates the largest and most complex pipeline network on the planet, hauling massive quantities of energy products consumed in the region it operates. The sheer quantity of energy products its pipelines transport gives it a terrific defensive moat in the industry.
Additionally, the company is future-proofing itself through significant investments in the renewable energy sector. With over 40 facilities across North America and Europe that generate recurring revenue, Enbridge is setting itself up for success in a greener energy industry.
As of this writing, Enbridge stock trades for $46.82 per share, offering its investors their dividends at an impressive 7.82% dividend yield. While seemingly alarming, its solid and defensive underlying business can ensure it can fund its quarterly payouts comfortably.
TC Energy
TC Energy is a $53.29 billion market capitalization North American energy company headquartered in Calgary, operating energy infrastructure across Canada, the U.S., and Mexico. It also boasts an extensive energy transportation pipeline network.
With over 92,600 km of natural gas pipelines along with 4,900 km of pipelines through its Keystone Pipeline system alone, it is another crucial giant in this space. The company also owns or has interests in 11 power-generation facilities that boast a 6,000-megawatt production capacity.
TRP stock and Enbridge stock have seen share prices decline due to rising interest rates in the past couple of years. Higher borrowing costs have negatively impacted its performance in the stock market in the short term.
However, the completion of its Coastal GasLink pipeline marks the removal of a major headwind, which spells great news for the stock moving forward.
As of this writing, TRP stock trades for $51.36 per share, boasting a 7.24% annualized dividend yield that it pays out monthly, which makes it an even more attractive high-yielding dividend stock for income-seeking investors.
Suncor Energy
Suncor Energy has long been a popular dividend stock, even finding a place in Warren Buffett’s portfolio through Berkshire Hathaway.
The $55.93 billion market capitalization giant is the largest integrated energy company in the country, specializing in producing synthetic crude oil from oil sands. While it reported record profits in 2022, its adjusted earnings are forecast to decline by 38% year over year in fiscal 2023 due to oil prices cooling off.
Unlike Enbridge stock and TRP stock, Suncor stock was forced to slash its dividends by around 55% due to pandemic-induced challenges. Additionally, the company has been suffering from negative investor sentiment due to safety issues at its facilities.
The fact that it felt compelled to cut back its dividends shows that it might not be as well positioned as it seemed for long-term investors. As of this writing, it trades for $43.09 per share and boasts a 5.06% dividend yield.
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Foolish takeaway
Despite operating in the cyclical and reputably volatile energy industry, Enbridge stock and TRP stock have offered a degree of consistency.
However, Suncor does not look well-positioned to match that right now. With Suncor being forced to slash its dividends by half in the pandemic, and with the effects of negative consumer sentiment, it might be too risky to consider adding it to your portfolio right now if you want to capture high-yielding dividends.
