3 Reasons to Buy TC Energy Stock Like There’s No Tomorrow

TC stock (TSX:TRP) jumped as the company announced strong earnings as well as a dividend increase, but more could be on the way.

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TC Energy (TSX:TRP) was one of the winners to come out of last week’s yo-yoing market. TC stock rose after strong earnings and has since only been climbing higher. So, let’s see what’s been driving the stock recently and if there’s more to come.

Earning its earnings

Shares of TC stock rose after the company reported strong results for its fourth quarter. The company delivered 16% growth in comparable earnings before interest, taxes, depreciation, and amortization (EBITDA) at $31 billion. Earnings per share (EPS) also came in at $1.35 for the quarter, up 22% compared to 2022 levels.

As for the full year of 2023, there was even more great news. TC stock saw 11% growth in EBITDA to $11 billion. Further, earnings almost double to $6.1 billion for the year. EPS increased 5% to $4.52 for 2023, with net income per share at $2.75. That was far higher than the net income per share of $0.64 the year before.

TC stock attributed the strong results both in the full quarter and the year to continued “reliability, availability, and exceptional operational performance of our assets.” This included its natural gas pipelines business, which continued to see strong usage.

More to come?

But perhaps what investors are even more interested in is the future. If TC stock can do well with problematic gas prices (which aren’t related to pipelines any way) and higher interest rates, what can it do during a positive environment?

The company is now focusing on long-term growth, which includes the completion of its Coastal GasLink pipeline project. Furthermore, it intends to spin off its liquids pipelines business for even more shareholder value.

Finally, its asset divestiture program has certainly helped the company strengthen its bottom line. And that improved financial position should help as the company looks to execute projects this year. This includes around $5.3 billion in 2023 in its budget. These would include the expansion of its NGTL System and Bruce Power Unit 6 Major Component Replacement.

The best part?

Yet perhaps the best part for investors today was that TC stock reported it would be increasing its dividend once more. The company announced a 3.2% dividend increase in its quarterly dividend. This increased it to $0.96 per share quarterly, or $3.84 per year. It was also the 22nd consecutive year of dividend growth for the company.

That puts the company at a dividend yield of 7.2% as of writing! This is huge for a company seeing strong returns, especially during the last few months. Shares are up about 18% since bottoming out back in October.

Overall, the company believes that the stock should continue to see its shares grow by 5-7% in the years to come. It should also be able to continue increasing its dividend as well, especially with growth on hand. And as the stock looks for more opportunities in renewable energy, this could only be the beginning of this growth stock’s future trajectory. Meanwhile, you can pick it up for a valuable 19 times earnings as of writing, with analysts increasing price targets every day.

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 has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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