Are These 2 TSX Stocks Smart Investments for Dividend Income?

Take a closer look at these two TSX stocks if you want to ignore the noise and uncertainty and want to secure passive income through reliable dividends.

Adam Othman

Adam is a value investor who is always on the hunt for fantastic undervalued companies that he can share with Motley Fool readers. He follows Warren Buffett and Charlie Munger's investment advice and has completed the Canadian Securities Course. When he's not investing, Adam can usually be found traveling or skiing.

Published June 10, 2025 4:00 pm EDT

| More on: CNQENB

Ever since the Trump administration came in, global markets have been in a state of flux. The litany of tariffs imposed by the new administration south of the border stirred up plenty of trouble. For Canada, in particular, there were tariffs of around 10% announced on all Canadian oil imports.

The initial announcement caused oil prices to drop 16% from US$71.71 to US$59.58 by April 8. The move dragged the market down with it. However, an announcement of a pause in tariffs saw the market shoot up again. As of this writing, the S&P/TSX Composite Index, which reflects the Canadian stock market’s performance, is up by over 17% from its April 8, 2025, low. This is an impressive bull run, but the pause on tariffs didn’t include the tariffs on energy products.

Considering this situation, it’s alright to wonder whether Canadian energy stocks are a smart investment right now. Today, we’ll look at two Canadian energy giants to help you determine the best course of action.

Pile of Canadian dollar bills in various denominations — Source: Getty Images

Enbridge

Enbridge (TSX:ENB) is a $139.58 billion market capitalization giant in the Canadian energy sector. The company owns and operates an extensive energy infrastructure network that transports a significant portion of hydrocarbons across Canada and the United States. Since it doesn’t produce hydrocarbons and transports them instead, it generates revenue based on the volume transported. Volatile commodity prices don’t directly affect the company.

Enbridge also runs one of the largest utility businesses in North America, letting it generate stable revenue with another defensive business segment. It is also growing a portfolio of renewable energy assets that can make it a solid long-term investment. Further volatility might be ahead in the near term, but it seems like a good investment to consider holding for years. As of this writing, it trades for $64.02 per share and offers a juicy 5.89% dividend yield.

Canadian Natural Resources

Canadian Natural Resources (TSX:CNQ) is among the old guard of Canadian energy companies. The $88.67 billion market-cap firm is one of the largest oil and natural gas producers in Western Canada. It also has offshore operations in Africa and the North Sea. CNQ stock is one of the most reliable energy producers in the country, with a remarkable long-term track record.

The first quarter of fiscal 2025 saw it generate record production levels and over $4.5 billion in adjusted funds flow. Despite the ongoing chaos, it generated around $2.4 billion in net profit. As of this writing, CNQ stock trades for $42.36 per share and boasts a juicy 5.55% dividend yield that warrants locking it into your portfolio today.

Foolish takeaway

Amid the chaos caused by the announcement of tariffs, Canadian energy stocks fell sharply since U.S. exports account for a significant portion of revenues. Since the pause isn’t applicable to Canadian energy imports, energy stocks are still in a state of turmoil. Regardless of the long-term outcome, only the businesses with the cost advantage will come out stronger on the other side. To this end, CNQ stock and ENB stock can be two of the best bets you can make if you’re bullish about the energy sector’s long-term potential.