Is TC Energy Stock Finally a Buy in 2024?

TC Energy’s consistent focus on expansion and maximizing asset value makes it a really attractive stock to buy in 2024.

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After a couple of challenging years, shares of TC Energy (TSX:TRP) finally seem on a path to recovery in 2024. TRP stock has risen 4.6% this year so far to $54.14 per share after sliding by 12% in the previous two years, increasing its market cap to $56.2 billion. By comparison, the TSX Composite benchmark has risen 3% on a year-to-date basis.

But is the recent recovery in TC Energy stock sustainable and makes it worth considering in 2024? Let’s find out.

TC Energy’s improving financial performance

If you don’t know it already, TC Energy is a Calgary-headquartered energy infrastructure company with a large network of natural gas and liquid pipelines. In recent years, its strategic moves and impressive financial performance, despite economic uncertainties, have captured investors’ attention.

In the final quarter of 2023, TC Energy’s revenue climbed by 4.8% YoY (year over year) to $4.2 billion. Its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) for the quarter rose 15.8% from a year ago to $3.1 billion. With the help of careful project execution and operational excellence, the energy firm’s adjusted quarterly earnings jumped 21.6% YoY to $1.35 per share, crushing Street analysts’ expectations of $1.11 per share.

Interestingly, the company has been exceeding analysts’ earnings estimates for eight consecutive quarters, reflecting its ability to continue outperforming financial predictions even in a challenging macroeconomic environment.

Preparing for further expansion

In 2023, TC Energy announced the mechanical completion of its Coastal GasLink pipeline project, which is likely to improve financial growth and expand profitability further in the future. During the year, the company also announced its intentions to spin off its liquids pipelines business. With this strategic move, it aims to meet the growing demand for energy products, which would allow it to maximize the value of its assets.

Moreover, TC Energy’s recent strategic divestitures, such as the sale of a 40% non-controlling equity interest in Columbia Gas and Columbia Gulf, have bolstered its balance sheet, providing the company with increased financial flexibility and reduced leverage. These moves are also in line with its goal to optimize the asset portfolio and improve financial health.

Could TC Energy stock continue to rally?

Looking ahead, TC Energy’s outlook for 2024 remains robust, with comparable EBITDA expected to be between $11.2 to $11.5 billion. The company plans to focus its capital expenditures on projects that promise to enhance its asset base and generate sustainable growth. Besides the anticipated in-service projects for 2024, these investments could help TC Energy maintain its growth trajectory in the long run and drive its share prices higher.

TC Energy stock looks even more attractive for income-focused investors as it has been raising its dividend for 24 consecutive years. The company’s dividend saw a 3.3% YoY increase in 2023 to $3.72 per share. Over five years, from 2018 to 2023, the dividend has climbed by 34.8%, from $2.76 to $3.72 per share.

TRP stock offers a hearty dividend yield of 7.1% at the current market price. Its consistently growing dividends reflect TC Energy’s commitment to shareholder returns, making it an attractive dividend stock for long-term investors seeking steady income and capital growth.

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.

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

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