After a strong start to the year, Canadian equity markets have turned volatile in recent days. Concerns around easing metal prices and elevated valuations following the sharp rally over the past few months appear to have made investors more cautious, contributing to increased market swings. In addition, ongoing geopolitical tensions, persistent inflation, and protectionist trade policies continue to weigh on sentiment.
In this uncertain environment, investors may look to strengthen their portfolios with high-quality dividend stocks that deliver consistent payouts and support steady passive income. Thanks to their reliable cash flows, such companies tend to be less vulnerable to market volatility, offering greater portfolio stability. Against this backdrop, let’s compare two leading midstream energy companies—Enbridge (TSX:ENB) and TC Energy (TSX:TRP)—to determine which may be the better buy right now.
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Enbridge
Enbridge is a diversified energy company that operates an extensive pipeline network transporting crude oil and natural gas across North America. In addition, it operates three regulated natural gas utilities in the United States and owns 41 clean energy generation facilities supported by long-term power-purchase agreements. About 98% of the company’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) is derived from cost-of-service or contracted assets, leaving it with minimal exposure to commodity price fluctuations. Notably, roughly 80% of adjusted EBITDA is inflation-indexed, providing a natural hedge against rising prices.
This contracted business model, combined with a steadily expanding asset base, has underpinned Enbridge’s strong financial performance and long-term share price growth. Over the past 20 years, the company has produced an average annual total shareholder return of 12%. It has also paid dividends uninterrupted for more than 70 years and has increased its dividend for 31 consecutive years. At its current quarterly payout of $0.97 per share, Enbridge offers an attractive dividend yield of 5.61%.
Looking ahead, Enbridge has identified approximately $50 billion in growth opportunities through the remainder of the decade and plans to invest about $10 billion annually to support these initiatives. Backed by this visible growth pipeline, management expects adjusted EBITDA and discounted cash flow per share to grow at a mid-single-digit pace for the rest of this decade. It also aims to return $40–$45 billion to shareholders over the next five years. Considering these factors, Enbridge appears well-positioned to sustain and grow its dividend payouts in the years ahead.
TC Energy
In October 2024, TC Energy completed the separation of its liquids pipeline business, allowing the company to sharpen its focus on its core natural gas, nuclear, and power operations. Its natural gas infrastructure spans approximately 93,600 kilometres of pipelines, transporting nearly 30% of North America’s daily natural gas consumption. In addition, TC Energy owns and operates a diversified portfolio of power-generation assets with a total capacity of 4,650 megawatts.
With a significant portion of its assets supported by rate-regulated frameworks and long-term take-or-pay contracts, the company generates stable, predictable cash flows that have underpinned steady share price performance. Over the past 20 years, TC Energy has delivered an average annual shareholder return of 9.8%. It has also increased its dividend for 25 consecutive years, while its dividend yield stands at 4.15%.
Looking ahead, rising natural gas demand could drive increased utilization of TC Energy’s assets. To capitalize on this trend, the company plans annual capital investments of $6–$7 billion to expand its asset base. As a result, management expects adjusted EBITDA to reach $12.6–$13.1 billion by 2028, implying annualized growth of 5–7%. Given its solid growth outlook and reliable cash generation, TC Energy appears well-positioned to continue delivering dividend growth in the years ahead.
Investors’ takeaway
Over the past 12 months, TC Energy has generated a total shareholder return of 27.6%, outperforming Enbridge’s 16.3%. Reflecting this stronger performance, TC Energy currently trades at a higher forward price-to-sales multiple of 5.1, compared with Enbridge’s multiple of 3.
While both companies present attractive investment opportunities, I am more bullish on Enbridge due to its more visible growth pipeline, higher dividend yield, and relatively lower valuation.
