Equity markets have been under pressure over the last few weeks amid uncertainties over the impact of tariffs and counter-tariffs on global growth. The S&P/TSX Composite Index is down 5% compared to its 52-week high. Meanwhile, investors with longer investment horizons should not get bogged down by this short-term volatility but instead should go long on quality stocks.
Here are three quality energy stocks that you can buy and hold forever.
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Enbridge
Enbridge (TSX: ENB) transports oil and natural gas across North America through its pipeline networks. It moves around 30% of the crude oil produced in North America and meets 20% of the United States’ natural gas consumption. Its toll framework, take-or-pay contracts, and long-term PPAs (power purchase agreements) contribute to stable and predictable revenue streams. Supported by these solid financials, the company has posted an average total shareholder return of 11.7% in the last 20 years.
Moreover, the Calgary-based energy company is expanding its asset base by investing $8–9 billion annually. Its acquisition of three natural gas utility assets in the United States for $19 billion has further strengthened its cash flows while reducing business risks. Meanwhile, these acquisitions have raised its net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) multiple to 5. However, the company’s management expects the EBITDA contribution from these acquisitions to improve the ratio in the coming quarters.
Further, Enbride’s management has stated that the imposition of tariffs by the United States will not immediately impact the volume of Canadian oil imported to the United States due to the integrated nature of both countries’ energy industries. So, the company expects no material impact from tariffs on its business. Considering its healthy growth prospects, I expect Enbridge, which has raised its dividends for the previous 30 years, to maintain its dividend growth.
TC Energy
TC Energy (TSX: TRP) operates a 93,300-kilometre pipeline network transporting natural gas across Canada, the United States, and Mexico. The energy infrastructure firm has also invested in 10 power-generating facilities, with a combined capacity of around 4.6 gigawatts. It earns around 97% of its adjusted EBITDA from rate-regulated assets and long-term take-or-pay contracts, delivering reliable cash flows.
Moreover, TC Energy has planned to put around $8.5 billion of projects into service this year. It also expects to make capital investments of $6–7 billion annually in the coming years to expand its asset base. Amid these growth prospects, the Calgary-based energy company’s management expects its adjusted EBITDA to reach $11.7–11.9 billion in 2027, with the midpoint representing an annualized growth rate of 5.7%. So, its growth prospects look healthy. Besides, the company currently offers a healthy forward dividend yield of 5.2% and trades at an attractive NTM (next 12 months) price-to-earnings multiple of 16.9, making it an excellent buy.
Fortis
My final pick would be Fortis (TSX: FTS), which operates 10 regulated utility assets, meeting the electric and natural gas needs of 3.5 million customers. Given its low-risk transmission and distribution business and a regulated asset base, the company’s financials are less prone to market volatility. Its stable and predictable cash flows have boosted its stock price growth, with the company delivering an average total shareholders’ return of 10.3% in the last 20 years.
Moreover, Fortis is expanding its asset base with a planned capital investment of $26 billion through 2029. These investments could grow its rate base at a 6.5% CAGR (compound annual growth rate) to $53 billion. The expanding rate base, solid operating performance, and favourable price revisions could boost its financials in the coming years. Amid these growth initiatives, Fortis’s management expects to raise its dividends by 4–6% annually through 2029.
