North America’s energy infrastructure giants, such as Enbridge (TSX:ENB) and TC Energy (TSX:TRP), are reshaping their strategies, and Bay Street is watching these developments closely.
In late 2023, Enbridge announced a landmark US$14 billion acquisition of three natural gas utilities from Dominion Energy, allowing it to expand its gas distribution footprint. Meanwhile, TC Energy has separated its oil pipeline business into a standalone company to enhance shareholder value. These bold moves come as both companies adapt to evolving energy markets and seek to optimize their vast infrastructure networks.
So, let’s see which TSX pipeline stock is a good investment right now.
Is Enbridge stock a good buy right now?
Enbridge has five primary business segments: liquids pipelines, gas transmission, gas distribution and storage, renewable power, and energy services. Valued at a market cap of over $100 billion, Enbridge transports crude oil and natural gas through extensive pipeline networks, operates North America’s largest natural gas utility, and maintains a widening renewable energy portfolio.
Enbridge’s performance in the third quarter (Q3) of 2024 demonstrated operational momentum across its portfolio as it expected to end the year near the top end of its EBITDA (earnings before interest, tax, depreciation, and amortization) guidance.
In Q3, Enbridge completed the acquisition of three U.S. gas utilities. It also added $7 billion to its secured growth program in 2024, including sanctioning a solar project and announcing expansion projects in the Permian basin.
Enbridge’s gas utilities are projected to achieve 8% annual rate base growth in the near term, driven by population growth, data center demand, and system modernization.
Enbridge maintained its Dividend Aristocrat status with 29 years of consecutive increases, supported by stable cash flows and minimal commodity exposure. It currently pays shareholders an annual dividend of $3.77 per share, translating to a yield of over 6%. Moreover, these payouts have risen from just $0.26 per share in early 1997.
Analysts tracking ENB stock expect adjusted earnings to grow from $2.78 per share in 2024 to $3.2 per share in 2026. If ENB stock is priced at 22 times trailing earnings, it would trade around $72 in 2027.
Is TRP Energy stock a good dividend stock?
TC Energy’s portfolio is primarily anchored in natural gas infrastructure, with 90% of its 2025 comparable EBITDA expected to originate from natural gas pipelines. Its capital program currently totals $28 billion, which indicates TC Energy is positioned to grow its cash flow and earnings in 2025 and beyond.
TC Energy expects comparable EBITDA to grow between 5% and 7% annually through 2027, driven by rate-regulated and long-term contracted assets that account for 97% of earnings. Moreover, it aims to maintain a debt-to-EBITDA ratio at an upper limit of 4.75 times, which is reasonable.
A significant portion of TC’s growth is expected to come from natural gas demand, which is forecast to reach about 160 billion cubic feet per day by 2035. Notably, its Bruce Power nuclear facility remains a key asset, with ongoing modernization projects and capacity expansions planned.
TC Energy pays shareholders an annual dividend of $3.28 per share. Comparatively, analysts forecast adjusted funds from operation (FFO) per share to rise from $5.70 per share in 2024 to $6.12 per share in 2025.
With a payout ratio of 55% and priced at 10.5 times forward AFFO, TC Energy stock is quite cheap and offers a forward yield of 5%. Analysts remain bullish and expect the TSX dividend stock to surge over 5% in the next 12 months.
The Foolish takeaway
Both Enbridge and TC Energy are fairly insulated from fluctuations in commodity prices, making them enticing investments for income investors. Canadians should consider gaining exposure to the two blue-chip TSX stocks, which provide diversification and lower overall risk.
