Canadian income investors are searching for good TSX stocks to add to their self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on generating reliable and growing dividends.
With markets near record highs and economic uncertainty potentially on the horizon, it makes sense to consider stocks with long histories of raising dividends throughout the economic cycle.
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Enbridge
Enbridge (TSX: ENB) is a major force in the utilities and energy infrastructure sectors in Canada and the United States. The company’s current market capitalization is near $170 billion, giving Enbridge the financial clout to make large strategic acquisitions while also driving growth through development projects.
Enbridge is currently working on a $40 billion capital program with investments spread out across the different divisions, including utilities, pipelines, exports, and renewable energy. As the new assets reach completion and start to generate revenue, Enbridge expects to deliver 5% annual gains in distributable cash flow over the medium term. This should enable the board to continue to increase the dividend. Enbridge raised the distribution in each of the past 31 years.
Acquisitions have been a big part of the growth story in recent years. Enbridge bought the largest oil export terminal in the United States in 2021. That move proved to be a savvy one, with global demand for U.S. and Canadian oil now on the rise as countries scramble to secure long-term supplies from reliable and stable sources.
Enbridge bulked up its renewable energy group when it purchased Tri Global Energy, the third-largest U.S. wind and solar developer, in 2022. The company is benefitting from a surge in power demand from tech companies that are contracting Enbridge to provide electricity via dedicated wind and solar installations for new AI data centres.
On the utilities side, Enbridge spent US$14 billion in 2024 to acquire three American natural gas utilities. The deal complements Enbridge’s extensive natural gas transmission network and made Enbridge the largest natural gas utility operator in North America. Domestic demand for natural gas is rising due to new gas-fired power generation facilities being built to feed data centres.
Finally, Enbridge is positioned well to benefit from a push by the Canadian government to export more oil and natural gas to international buyers. The company is a partner on the Woodfibre liquified natural gas (LNG) export facility being built in British Columbia. Enbridge would also be a top candidate to participate in the construction and operation of any new large oil pipeline project that might get the green light in Canada in the next few years.
As such, the long-term outlook for the energy infrastructure industry should be positive.
The bottom line
In the near term, investors should anticipate some market turbulence as valuations across many sectors look stretched, just as rising inflation threatens to force rate hikes at the central banks. That being said, investors who buy ENB stock at the current price can get a solid 5% dividend yield. Pullbacks would be viewed as an opportunity to add to the position for a buy-and-hold portfolio.
