Valued at a market cap of $69.7 billion, TC Energy (TSX:TRP) is among the largest companies in Canada. Since the start of 1995, the TSX stock has returned 450% to shareholders. However, if we adjust for dividend reinvestments, the cumulative returns are much closer to 2,400%.
Despite its stellar performance over the last three decades, the TSX dividend stock offers a tasty yield of 5.5% as of April 2025. Let’s see if you should own TC Energy stock for its 5.5% dividend yield right now.
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Is the TSX dividend stock a good buy?
TC Energy is a diversified energy infrastructure company. It operates a vast network of natural gas pipelines, which transport natural gas from supply basins to local distribution companies, power generation plants, industrial facilities, and other businesses.
In 2024, TC Energy reported a 6% increase in comparable EBITDA (earnings before interest, tax, depreciation, and amortization) from continuing operations, though quarterly comparable earnings of $1.1 billion were down 8% from the same period last year.
“2024 has been a year of significant achievement on milestones for TC Energy,” said Chief Executive Officer Francois Poirier on the earnings call. TC successfully completed the spinoff of its liquids business and expects its Southeast Gateway pipeline in Mexico to achieve commercial in-service in the second quarter (Q2) of 2025.
TC Energy forecasts EBITDA in 2025 to range between $10.7 billion and $10.9 billion, representing 8% year-over-year growth, with a three-year growth target of 5-7% through 2027.
The energy giant has significantly strengthened its balance sheet, reaching its debt-to-EBITDA target of 4.75 times. Its board declared a Q1 dividend of $0.85 per share, marking a 3.3% increase and its 25th consecutive year of dividend growth.
Looking ahead, TC Energy is positioning itself to capitalize on the surging demand for data centres. “Data centres are one component of our power demand opportunities,” said newly appointed executive vice president Tina Faraca. “Our vast footprint gives us access within 15 miles to 60% of the over 350 data centers that are under development.”
TC Energy reported about 10 gigawatts of requests to its business development team, with approximately $2 billion of potential opportunities across several systems, including Wisconsin, Ohio, Virginia, and Indiana.
Nuclear power also presents significant growth potential. “The Ontario IESO projects an approximately 69,000 megawatts shortfall in total installed capacity by year 2050,” Poirier noted, emphasizing that nuclear power will be essential to meeting Ontario’s demand.
What’s next for the TSX energy stock?
TC Energy maintains its capital expenditure guidance at $6-7 billion annually and expects to fill the majority of its remaining project capacity by the end of 2026 with lower-risk projects that deliver attractive build multiples of five to seven times.
Despite its massive size, TC Energy is expected to grow its free cash flow (FCF) from $1.06 billion in 2025 to $2.64 billion in 2029. In this period, its FCF margin is projected to expand from 7.1% to 13.8%.
TC’s improving profit margins should help it grow its dividends from $3.40 per share in 2025 to $3.79 per share, given consensus price targets.
Analysts tracking the TSX stock expect it to gain 5.6% over the next 12 months. If we adjust for dividends, cumulative returns could be closer to 11%.
