When market volatility strikes, investors often run from energy stocks. But for long-term thinkers, that’s when the real opportunities emerge. Right now, one of the most reliable dividend payers in Canada’s energy sector is trading well below its all-time highs, but on the path upwards. That stock is TC Energy (TSX: TRP). Down 7% from highs, but up 3% recently, it could be time to jump back in.
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About TRP
TC Energy is a pipeline and power company that transports around a quarter of North America’s natural gas. It also operates critical infrastructure like the Keystone Pipeline. While oil and gas prices can swing wildly, pipeline operators tend to enjoy more stable, contracted revenue. That’s part of what makes this dividend stock so compelling for investors willing to wait out short-term dips.
Shares of TC Energy are down about 7% from the peak earlier this year, despite the business showing resilience in a choppy energy market. This dip comes as the company restructures and refocuses, including spinning off its oil pipeline segment into a new entity called South Bow Corporation. Some investors may be cautious while the spinout completes, but others see it as a chance to scoop up shares before value is unlocked.
Into earnings
According to TC Energy’s first-quarter 2025 earnings, the dividend stock delivered solid results. Revenue came in at $4.25 billion, up from $3.91 billion the year before. Comparable earnings were $1.26 billion or $1.19 per share, compared to $1.23 billion or $1.21 per share in Q1 2024. The slight dip in per-share earnings was due to a higher share count, not weaker performance. TC Energy’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) climbed 4%, driven by solid contributions from its Canadian and U.S. natural gas pipelines.
Meanwhile, the dividend stock reiterated its commitment to reducing debt and returning value to shareholders. In fact, it declared an increase of its dividend, now at $3.40 annually. That gives the dividend stock a yield of around 5.1% at recent prices. Few other large-cap energy names offer a dividend that high, especially one that’s been paid consistently for more than two decades.
To keep paying that dividend, TC Energy is actively managing its capital. It sold off over $2 billion in assets in 2023 and expects another $3 billion in divestitures this year. This should help fund capital projects and reduce leverage. Its goal is to reach a debt-to-EBITDA ratio of less than 4.8 times, and it’s already on track.
Considerations
Some might argue that higher interest rates and regulatory risks make utilities and pipelines less attractive. But in TC Energy’s case, those risks appear well-managed. The dividend stock has long-term, regulated contracts across most of its assets. Its exposure to commodity prices is limited. And the South Bow spinout could help unlock more targeted value from its liquids segment.
One risk investors should watch is project execution. TC Energy has had issues in the past with cost overruns, most notably with its Coastal GasLink pipeline. However, that project is now complete, and the focus has shifted to more measured growth. With fewer megaprojects on the books, the dividend stock has more room to pay down debt and support its dividend.
What makes this stock truly magnificent is how it fits into a long-term portfolio. It offers regular income, inflation-resistant infrastructure, and a business model that isn’t overly exposed to commodity shocks. Even during downturns, gas demand remains steady, especially as it replaces coal in power generation across North America.
Bottom line
For Tax-Free Savings Account (TFSA) investors, the current price offers a chance to lock in a high yield while waiting for capital appreciation. If the South Bow spinout boosts the valuation, as similar energy separations have in the past, it could add to the upside.
So while some may hesitate with TC Energy still down from its highs, that could be the exact reason to take interest. Long-term infrastructure doesn’t go out of style. And for investors who prize dividends and stability, TC Energy could be one of the better bargains on the TSX today.
