The arrival of Donald Trump in the Oval Office and the executive orders that have followed have triggered trade wars, leading to plenty of uncertainty. The U.S. president’s 10% tariff on energy imports from Canada came into effect on March 4. In response, Ontario imposed a 25% surcharge on power exports to the U.S. on March 3.
Ontario could increase its tariff response charge or halt electricity exports to the U.S. altogether, depending on the actions taken. The situation is messy, with plenty of uncertainty surrounding the energy sector and the broader economy. The tariff war could adversely impact Canadian oil and gas companies with integrated energy trade and cross-border operations.
The oil and gas sector is the heavyweight industry in the TSX. The uncertainty might create issues, but there are plenty of holdings you can consider investing in if you have a long investment horizon. Today, I will discuss TSX energy stocks you might want to look at closely.
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Suncor Energy
Suncor Energy (TSX:SU) is an integrated energy giant producing crude oil through oil sands in Alberta. The heavy hitter from the Canadian energy industry is not immune from the effects of the tariff war. The situation is weighing on its outlook, and it is slowly becoming evident with the movement in the stock chart.
However, the downturn might be a good time to invest in its shares. Trump has already backed off on many energy-related tariffs. Suncor is an energy company considered vital to the North American energy sector due to the sheer volume of energy products it produces. While it reported a drop in year-over-year net earnings in the fourth quarter (Q4) of 2024, not everything is gloomy.
The company achieved record upstream production that averaged 875,000 barrels per day and its cash flow from operations increased from $4.318 billion last year to $5.083 billion. As of this writing, it boasts a 4.41% dividend yield that investors can lock in.
Enbridge
Enbridge (TSX:ENB) is another oil and gas industry heavyweight, particularly focusing on energy transportation. Enbridge owns and operates an extensive pipeline network spanning Canada and the U.S. that transports crude oil, natural gas, and other energy products.
The integrated energy infrastructure company has increased its dividends for the last 30 years and paid its shareholders dividends for the last 70. Its revenue depends on the volume of commodities transported, remaining unaffected by fluctuating prices. Enbridge also operates a large renewable energy portfolio and a natural gas utility business that can further future-proof the company.
As of this writing, Enbridge stock trades for $61.42 per share and boasts a juicy 6.14 dividend yield that you can lock into your portfolio.
Tamarack Valley Energy
Tamarack Valley Energy (TSX:TVE) is a mid-cap energy company headquartered in Calgary with a $2.22 billion market capitalization that pays monthly dividends. The company might not be as big as the other two peers I’ve discussed, but it isn’t an energy stock to shrug aside. A steady performer, it boasts an attractive 3.75% dividend yield.
The company’s management has a long-term plan to reduce debt, improve returns, and increase shareholder value through share buybacks. In the first three months of 2024, net income grew by 323% year over year, and free funds flow climbed by 69%.
Despite ongoing uncertainty in the industry, its management forecasts up to $425 million in annual free funds flow in five years, accompanied by up to 15% in annual returns to shareholders — an improvement in the overall situation can mean significant long-term capital gains.
Foolish takeaway
Suncor Energy and Enbridge stock remain no-brainer buys due to terrific track records, dividends, a history of resilience, and the economic moat to weather the storm. Tamarack Valley can deliver multi-bagger returns in the long run due to its steadily improving performance.
