By keeping interest rates at lower levels, the Bank of Canada is signalling a clear pivot in monetary policy. This move was mainly focused on stimulating economic growth and providing relief to borrowers amidst rising inflationary pressures. As we reflect on this policy shift, it’s clear that certain market sectors on the TSX could benefit more than others.
One such sector is energy, which has seen renewed interest due to surging global demand for energy products and deteriorating supply, as well as the ongoing geopolitical crisis. In the energy sector, companies have also capitalized on strategic acquisitions and higher commodity prices. Currently among the top Canadian stocks from this sector are Baytex Energy (TSX: BTE) and Enbridge (TSX: ENB). Let me explain why.
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Baytex Energy stock
Baytex Energy, a Calgary-based energy firm, has seen its stock jump sharply of late. With a current stock price of $5.92 per share and a market cap of $4.4 billion, Baytex Energy has seen an 85% increase in its stock price over the last year. The company pays a quarterly dividend with a yield of 1.5%, providing investors with both growth potential and income.
Baytex stock’s recent performance has been fueled by its strategic divestiture of U.S. Eagle Ford assets, which netted $3 billion in proceeds. This move allowed the company to strengthen its financial position and focus on its Canadian operations. In 2025, Baytex Energy delivered a net loss due to one-time items related to the sale, but its operating performance remained strong. For example, the company’s cash flows from operations totaled $1.5 billion for the year, including $228 million in the fourth quarter alone.
Meanwhile, Baytex continues to focus on its Canadian operations, where it has a strong portfolio of assets. The company expects to achieve organic production growth of 3% to 5% in 2026, with exploration and development expenditures capped at $550 million to $625 million. Baytex Energy also plans to maintain its current dividend while prioritizing share buybacks, giving investors a balanced approach to capital returns.
Enbridge stock
Enbridge, a Calgary-based energy infrastructure giant, has also been a strong performer in the last year. With a current stock price of $75.40 per share and a market cap of $164.5 billion, ENB has seen a 17% increase in its stock price over the last year. The company pays a quarterly dividend with a yield of 5.2%, making it an attractive option for long-term income investors.
Enbridge has a diversified portfolio of energy infrastructure assets, which include liquids pipelines, gas transmission, gas distribution and storage, and renewable power generation.
In 2025, the company reported record financial results, with full-year earnings attributable to common shareholders reaching $7.1 billion, up sharply from $5.1 billion in 2024. Also, its adjusted earnings for the year rose 9% YoY (year-over-year) to $6.6 billion, while its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) hit $20 billion, up 7% YoY.
Enbridge has been disciplined in its capital allocation, as it invested $5 billion in organic growth projects in 2025. These investments include its Mainline Optimization Phase 1 (MLO1) project, which is expected to add 150 kbpd (thousand barrels per day) to the Mainline system and 100 kbpd to the Flanagan South Pipeline by 2027.
Also, its long-term growth initiatives are focused on Enbridge’s diversified portfolio of energy infrastructure assets. The company expects to place $8 billion of projects into service in 2026, including the MLO1 project and several renewable power projects. In addition, Enbridge has a secured growth backlog of $39 billion, giving investors visibility into its future earnings growth.
