Retirees and other Tax-Free Savings Account (TFSA) investors are searching for top TSX dividend stocks with long track records of distribution growth to add to portfolios focused on passive income.
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Enbridge
Enbridge (TSX: ENB) increased its dividend in each of the past 30 years. The stock is up more than 20% in the past 12 months.
The latest rally actually started in October 2023, around the time the U.S. Federal Reserve and the Bank of Canada indicated they were done raising interest rates to get inflation under control. Steep interest rate hikes that occurred in 2022 and 2023 drove up borrowing costs and raised debt expenses on variable-rate loans. Enbridge and other pipeline companies use debt to fund part of their growth initiatives, which can cost billions of dollars and often take years to complete. This is why the jump in interest rates triggered a pullback in Enbridge’s share price in the back half of 2022 and through much of 2023.
Rate cuts by the central banks in 2024 provided an extra tailwind for Enbridge’s share price. The stock is also getting a boost from strong demand for its services, along with added revenue coming from recent acquisitions and the growing capital program.
Earnings
Enbridge reported first-quarter (Q1) 2025 adjusted earnings of $2.2 billion, or $1.03 per share, compared to $2.0 billion, or $0.92 per share, in the same period last year. Distributable cash flow rose 9% to $3.8 billion.
Oil flow along the core Mainline pipeline infrastructure reached a record 3.2 million barrels per day. Enbridge’s oil export terminal in Texas also had a record quarter in export volumes.
Enbridge spent US$14 billion in 2024 to acquire three natural gas utilities in the United States. The deals made Enbridge the largest natural gas utility operator in North America and added stable rate-regulated revenue.
Enbridge recently increased its capital program to $28 billion to drive growth in the coming years through accretive, low-risk projects. As new assets are completed and go into service, the company says it remains on track to meet its 2023 to 2026 targets of 7% to 9% growth in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). Adjusted earnings per share (EPS) growth is expected to be 4% to 6%. Distributable cash flow (DCF) growth is targeted at 3%.
Beyond 2026, Enbridge anticipates adjusted EBITDA, EPS, and DCF will rise by 5% per year.
Opportunity
Enbridge’s size and strong balance sheet give it the financial firepower to make large strategic acquisitions. The company has extensive operations in both Canada and the United States, moving roughly 30% of the oil produced in the two countries and roughly 20% of the natural gas used by American homes and businesses.
Demand for North American energy products is expected to grow and international buyers seek out reliable and stable supplies of oil and natural gas liquids.
Risks
Tariffs imposed by the United States could potentially drive a spike in inflation. This would put pressure on the U.S. Federal Reserve to either hold interest rates steady for longer or potentially raise rates again. In that scenario, Enbridge’s share price could face new headwinds.
The bottom line on reliable dividend stocks
Enbridge is a good example of a top TSX stock with a great track record of dividend growth. Investors who buy Enbridge at the current level can get a dividend yield near 6%. If you have some TFSA cash to put to work, this stock deserves to be on your radar.
