Enbridge (TSX:ENB) is a stock most Canadians have owned for a long time. It is, after all, a dividend darling with 30 consecutive years of dividend growth and more than 60 years of dividend-paying history. It is the reliable retirement partner of many retirees today because it has grown its dividend at 9% compounded annual growth rate (CAGR). Does it still have the same growth and return that made it a retiree’s favourite?
Should investors dump Enbridge stock?
Enbridge is currently transitioning its portfolio from oil pipelines to natural gas pipelines. The gas transmission, storage, and distribution now make up more than 50% of its revenue. However, this transition has accelerated capital expenditure and increased debt. The diversion of cash has slowed its dividend-growth rate from 9.8% in 2020 to 3% since then. The 3% growth will continue till 2026, and from 2027 onwards, 5% dividend growth could be in the cards.
The current scenario of high debt and capex has made Enbridge less appealing as a dividend stock for the medium term. However, its long-term appeal remains intact. If you have accumulated Enbridge stock over the last few years at a share price below $50, you could consider holding the stock for stable passive income. The company can continue paying dividends for years to come and even grow them by mid-single digits.
However, if you are looking to make fresh investments, there are better options than Enbridge for higher growth in the medium term.
Consider buying this dividend champ instead
The unique point of Enbridge stock was its high dividend-growth rate and long dividend history. Since the first one has slowed, Canadian Natural Resources (TSX:CNQ) presents an attractive option in the medium term, provided the company maintains an 8-9% dividend-growth rate.
Unlike Enbridge, which has a longer turnaround time to realize cash flows from pipeline projects, CNQ has a quicker turnaround time. It acquires oil sands reserves and starts producing oil. The higher production converts to more cash flow, which it uses to pay down debt. Higher production also leads to optimum utilization of refineries, reducing production costs. CNQ incorporates the dividend into its breakeven cost of mid-US$40/barrel.
Thus, higher oil prices increase cash flow and dividends. In the bust cycles, lower debt and share buybacks help increase dividend per share. In the last five years, Enbridge slowed its dividend-growth rate to 3%, while CNQ increased it to an average annual rate of 23.5%.
Taking a conservative approach, CNQ might keep its dividend-growth rate around 8-9% as oil prices normalize and its debt level increases to $17 billion, above its $12 to $15 billion range.
Which is a better buy in 2026: Enbridge or CNQ?
The best way to decide is to see the dividend outcome on a $10,000 investment. Although Enbridge has a higher dividend yield of 5.83% than Canadian Natural Resources’s 4.9%, the latter has a higher growth rate. A $10,000 investment today can buy 152 shares of Enbridge and 214 shares of CNQ. If Enbridge grows its dividend by 5% from 2027 onwards and CNQ by 9%, their dividends would be at par in 2028, and CNQ’s would exceed Enbridge’s in 2029.
| Year | Enbridge Dividend Per Share | Dividend income on $10,000 Investment | CNQ Dividend per Share | Dividend income on $10,000 Investment |
| 2025 | $3.77 | $573.04 | $2.35 | $502.90 |
| 2026 | $3.88 | $590.23 | $2.56 | $548.16 |
| 2027 | $4.08 | $619.74 | $2.79 | $597.50 |
| 2028 | $4.28 | $650.73 | $3.04 | $651.27 |
| 2029 | $4.50 | $683.27 | $3.32 | $709.88 |
| 2030 | $4.72 | $717.43 | $3.62 | $773.77 |
However, CNQ must maintain the 9% dividend-growth rate for it to be more attractive than Enbridge.
Investor takeaway
In investing, the better stock is always dynamic as changing market conditions, management decisions, the company’s fundamentals, and share price keep moving.
