Canadian equity markets have rebounded strongly this month, with the S&P/TSX Composite Index advancing 4.2%. A recovery in precious metal prices, along with renewed investor interest in technology stocks, has helped lift the broader market. However, ongoing geopolitical tensions, persistent inflationary pressures, and the potential impact of protectionist policies on global growth continue to cloud the outlook.
In this uncertain environment, investors may want to reinforce their portfolios with high-quality dividend stocks that generate stable cash flows and have a proven track record of consistent or growing payouts. Against this backdrop, let’s assess Enbridge (TSX: ENB) and TC Energy (TSX: TRP) to determine which stock appears to be the better buy at current levels.
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Enbridge
Enbridge operates one of North America’s largest pipeline networks, transporting roughly 30% of the continent’s crude oil production and about 20% of the natural gas consumed in the United States under tolling frameworks and long-term take-or-pay contracts. In addition, the company owns 41 renewable and clean energy facilities backed by long-term power purchase agreements, along with three regulated natural gas utilities.
Approximately 98% of Enbridge’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) is derived from regulated assets or long-term contracts, and about 80% of its cash flows are inflation-indexed. This highly predictable business model supports consistent financial performance and stable, reliable cash generation. Reflecting this strength, Enbridge has delivered an average total shareholder return of approximately 12% over the past 20 years.
The company also boasts an impressive dividend track record, having paid dividends for more than 70 years and increased its payout for 31 consecutive years. It currently offers a forward yield of about 5.6%, making it particularly attractive for income-focused investors.
Looking ahead, Enbridge has identified around $50 billion in growth opportunities through the remainder of the decade and plans to invest roughly $10 billion annually to advance these projects. Supported by these expansion initiatives, management expects to return $40–$45 billion to shareholders over the next five years, reinforcing the sustainability of its dividend and long-term shareholder returns.
TC Energy
TC Energy is another major pipeline operator that sharpened its strategic focus by spinning off its liquids pipeline business in October 2024. The company now focuses on its core natural gas pipelines and power-generation operations. It operates approximately 93,600 kilometres of pipelines, transporting nearly 30% of North America’s daily natural gas consumption. In addition, TC Energy owns a diversified portfolio of power-generation assets with a total capacity of 4,650 megawatts.
The company generates stable, high-quality earnings through rate-regulated frameworks and long-term take-or-pay contracts, supporting consistent returns and cash flows. Over the past 20 years, TC Energy has delivered an average total shareholder return of 9.8%. It has also increased its dividend for 25 consecutive years and currently offers a forward yield of approximately 4.2%.
Looking ahead, growing natural gas production and rising demand across North America provide a favourable backdrop. To capitalize on this trend, TC Energy plans to invest $6–$7 billion annually to expand and enhance its asset base. Supported by these investments, management expects adjusted EBITDA to reach $12.6–$13.1 billion by 2028, implying annualized growth of 5–7%.
Given its solid growth outlook, disciplined capital program, and reliable cash generation, TC Energy appears well-positioned to continue delivering steady dividend growth and attractive total shareholder returns in the years ahead.
Investors’ takeaway
While Enbridge has historically delivered superior long-term returns, TC Energy has outperformed over the past 12 months, generating a total shareholder return of 25.9% compared to Enbridge’s 14.4%. Reflecting this stronger recent performance, TC Energy currently trades at a higher next-12-month price-to-sales multiple of 5.1, versus Enbridge’s multiple of 3.
Although both companies present compelling opportunities for income-focused investors, I remain more bullish on Enbridge. Its solid track record, higher dividend yield, and clearly defined growth pipeline provide greater visibility and income potential, making it my preferred choice at current levels.
