Don’t Ignore These 2 Dividend-Growth Stocks With 7% Yields

These top dividend-growth stocks now offer great yields.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The pullback in the share prices of some of Canada’s top dividend stocks is giving TSX investors seeking passive income a chance to get great yields while setting their portfolios up for decent potential gains.

Enbridge

Most investors know Enbridge (TSX:ENB) for its extensive oil pipeline operations. The company is certainly a major player in that segment, carrying nearly a third of the oil produced in Canada and the United States. Oil demand remains robust globally, and while the shift to electric vehicles will cut into gasoline usage, the need for oil isn’t going to disappear soon, and global demand for reliable North American oil is rising. This is why Enbridge purchased an oil export terminal in Texas for US$3 billion in 2021 and is expanding the facility.

Enbridge also has a large network of natural gas transmission assets and is set to become the biggest natural gas utility operator in North America as it wraps up its US$14 billion acquisition of three natural gas utilities in the United States. The company is also a partner in the Woodfibre liquified natural gas (LNG) export facility being built in British Columbia. As with oil, international buyers are seeking reliable sources of natural gas from countries within stable geopolitical regions. Natural gas is used to fuel power-generation sites that are needed to meet soaring electricity demand from power-hungry artificial intelligence data centres. The transition to renewables will continue, but wind and solar power have limitations. Gas-fired power generation is viewed by many countries as a good option that produces less emissions than burning oil or coal.

Enbridge’s export assets, along with the infrastructure to move oil and gas, put the company in a good position to benefit from shifts in international energy markets. To round out the portfolio, Enbridge continues to expand its renewable energy group in both North America and Europe.

Created with Highcharts 11.4.3Enbridge PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Enbridge isn’t as cheap as it was last fall when the share price dipped to $43, but at the current price near $48.50, the stock still looks attractive, and more upside should be on the way as interest rates decline. The Bank of Canada has already trimmed its target rate by 0.25%. The U.S. Federal Reserve is expected to start cutting rates before the end of 2024 or in early 2025. Once this happens, more money could flow back into ENB stock. The company uses debt to fund part of its capital program. Lower rates should improve profits and will free up more cash for payouts.

Enbridge increased the dividend in each of the past 29 years. The current $25 billion capital program should provide enough growth to distributable cash flow to support ongoing dividend hikes. Investors who buy ENB stock at the current level can get a dividend yield of 7.5%.

TC Energy

TC Energy (TSX:TRP) is another leading Canadian energy infrastructure company. Natural gas is the core focus, with 93,000 km of natural gas pipeline infrastructure and roughly 650 billion cubic feet of natural gas storage capacity across Canada, the United States, and Mexico. TC Energy also owns oil pipelines that it plans to spin off into a separate business this year. Power-generation facilities round out the asset portfolio.

TC Energy saw the budget for its Coastal GasLink pipeline more than double to $14.5 billion. The project reached mechanical completion in 2023 and is expected to start moving gas to a new LNG facility on the B.C. coast next year.

Management sold an interest in some U.S. assets in 2023 for $5.3 billion, and sales of $3 billion are anticipated this year. The funds will go a long way to reducing debt and shoring up the balance sheet to pursue additional capital projects. Coastal GasLink recently completed a $7.15 billion bond deal to refinance debt.

TC Energy raised the dividend in each of the past 24 years. Capital investments will be about $8 billion in 2024 and are expected to trend in the $6 billion to $7 billion range over the next few years. As new assets go into service there should be adequate cash flow growth to support ongoing annual dividend increases.

TC Energy trades below $52 per share at the time of writing. It is off the 12-month bottom, around $44, but is still well below the $74 it reached in 2022, so there is a decent upside opportunity. Investors who buy at the current level can get a dividend yield of 7.4%.

The bottom line on high-yield TSX stocks

Enbridge and TC Energy pay attractive dividends that should continue to grow. If you have some cash to put to work in a portfolio targeting high-yield passive income, these stocks look cheap right now and deserve to be on your radar.

Should you invest $1,000 in Enbridge right now?

Before you buy stock in Enbridge, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Enbridge wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 recommends Enbridge. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of Enbridge.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Dividend Stocks

TFSA Investors: 2 Top TSX Stocks With Decades of Dividend Growth

These stocks have great track records of delivering dividend growth in challenging economic conditions.

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

TFSA: Invest $15,000 in This TSX Stock and Create $884 in Annual Passive Income

This TSX stock certainly has quite the long-term outlook -- one that could create passive income now and decades to…

Read more »

Dividend Stocks

Invest $20,000 in These REITs for Over $1,000 in Annual Passive Income

Are you looking for a boost in your passive income? Then consider these two REITs for your self-directed investment portfolio.

Read more »

Asset Management
Dividend Stocks

How I’d Allocate $10,000 in 2 Canadian Growth Stocks for the Long Run

Both growth stocks offer a compelling mix of income, growth, and value, and I believe they can outperform over the…

Read more »

grow money, wealth build
Dividend Stocks

2 Dividend-Growth Stocks to Buy on the Pullback

These stocks have increased their dividends annually for decades.

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

BCE Stock Analysis: A Smart Choice for Potential Value and Income

BCE stock has slipped to its June 2009 level amid Trump tariff uncertainty and intensity. Does the sharp dip provide…

Read more »

Person slides down a stair handrail
Dividend Stocks

Should You Buy Cargojet Stock at $70?

Cargojet stock might be down, but don't let that scare you off. It's still a long-term opportunity.

Read more »

Middle aged man drinks coffee
Dividend Stocks

3 Monthly Dividend Stocks to Buy and Hold Forever

Add these three TSX dividend stocks to your self-directed portfolio for reliable monthly passive income.

Read more »