When it comes to earning passive income through dividends, Enbridge (TSX:ENB) and BCE (TSX:BCE) are two top Canadian dividend stocks with strong fundamentals. Both companies have long track records of providing reliable payouts to their shareholders and currently offer attractive dividend yields. But if you’re new to dividend investing, you might wonder which one is the better option for building a reliable income stream for the long term.
To find answers to this question, in this article, we’ll take a closer look at the financial health, dividend-growth history, and future outlook for both Enbridge and BCE.
Enbridge stock
Let’s start with Enbridge, one of the major players in North America’s energy infrastructure sector. This Calgary-headquartered company has a market cap of $120.7 billion as its stock trades at $55.42 per share with over 16% year-to-date gains.
At this market price, ENB stock offers a 6.6% annualized dividend yield. More importantly, this energy sector giant has a solid track record of delivering steady dividend increases, having raised its dividend payout every year for the last 29 years.
In the five years between 2018 and 2023, Enbridge’s total revenue fell 5.9% to $43.6 billion. Despite this decline in revenues, the company’s adjusted annual earnings rose 5.3% from $2.65 per share in 2018 to $2.79 per share in 2023, reflecting its ability to generate stable earnings even in a challenging environment.
This earnings growth, despite a drop in revenues, has allowed Enbridge to grow its dividend payouts, offering investors a reliable source of passive income. Moreover, the company’s increasing focus on crude oil export business and strategic investments in renewable energy infrastructure brighten its long-term growth outlook.
BCE stock
That said, BCE has also emerged as one of the top dividend stocks in Canada over the last two decades. This Verdun-headquartered company currently has a market cap of $43.1 billion as its stock trades at $47.05 per share after sliding by nearly 10% year to date.
Recent declines in BCE’s share prices, however, have led to an increase in its annualized dividend yield, which currently stands at 8.5%. The Canadian communication giant has been increasing dividends for 16 consecutive years.
Despite facing global pandemic-related operational challenges in between, BCE’s total revenue climbed by 5.1% in five years from 2018 to 2023. However, external factors such as high inflationary pressures and lower consumer spending amid an unpredictable economic environment pressured its profitability. As a result, its adjusted annual earnings slipped by 8.5% from $3.51 per share in 2018 to $3.21 per share in 2024.
Nevertheless, BCE’s consistent focus on cost-efficiency initiatives and digital transformation position it well for long-term growth as demand for advanced telecommunications services continues to grow.
Enbridge vs. BCE: Which one is a better buy?
The answer to this question largely comes down to your risk appetite and individual preferences as an investor. On the one hand, Enbridge offers a compelling option with its 6.6% yield and long history of dividend increases, especially if you’re seeking a high dividend yield with exposure to a stable energy infrastructure sector. On the other hand, BCE has a higher dividend yield of 8.5% right now, which could appeal to those looking for a higher immediate income stream. Although it operates in a defensive industry and has a strong financial base, the ongoing economic challenges might continue to pressure BCE’s earnings in the near term.
