Enbridge (TSX:ENB) and TC Energy (TSX:TRP) soared in the past year. Pensioners and other dividend investors are wondering if ENB stock or TRP stock is still undervalued and good to buy for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on yield and total returns.
Enbridge
Enbridge trades near $63.50 per share at the time of writing. The stock is up 30% in the past 12 months and is close to its all-time high just above $65.
Enbridge shifted its growth strategy in recent years to take advantage of emerging energy opportunities and to broaden out the asset portfolio as it became harder to get large oil and natural gas pipeline projects approved and built.
On the export side, Enbridge purchased an oil export terminal in Texas and is a partner in the Woodfibre liquified natural gas (LNG) export facility being built on the coast of British Columbia. Enbridge also expanded its renewable energy group with the addition of a large American wind and solar developer. In 2024, Enbridge completed its US$14 billion acquisition of three natural gas utilities in the United States. The deals made Enbridge the largest natural gas utility operator in North America.
Enbridge’s core oil and natural gas transmission infrastructure remains strategically important for the Canadian and U.S. economies. Opportunities for new cross-country pipelines could emerge in Canada in the near term as the country looks to reduce its reliance on the U.S. market.
Enbridge currently has a $26 billion capital program on the go to help drive revenue and cash flow expansion to support ongoing dividend increases. Enbridge raised the distribution in each of the past 30 years. Investors who buy ENB stock at the current price can get a dividend yield of close to 6%.
TC Energy
TC Energy’s strategy shift has been in the other direction in the past couple of years. The company spun off its oil pipelines business in 2024 to focus more on natural gas transmission and storage. TC Energy also has a portfolio of power production assets.
Management did a good job of monetizing non-core assets in the past two years to shore up the balance sheet after TC Energy had to take on extra debt to get its Coastal GasLink pipeline completed. The asset is now operational and will move natural gas from Canadian producers to a new LNG export facility in British Columbia. TC Energy is also on track to start up a new pipeline in Mexico this year. The revenue boost from the two projects should help support ongoing dividend growth, along with contributions from other assets planned for development in the next few years.
TC Energy has increased the dividend annually for more than two decades. Investors can currently get a dividend yield of 4.9%. TC Energy trades near $69.50 at the time of writing. The stock is up more than 26% in the past 12 months.
Is one a better pick today?
Dividend growth will likely be similar for the two companies in the near term, so income investors might want to go with Enbridge for the higher yield. At the current share prices, I would probably split a new investment between the two stocks for a portfolio focused on total returns.
