Enbridge or Suncor? Here’s the Dividend Stock I’d Rather Own

Enbridge or Suncor? Here’s a look at the two Canadian energy stocks to see which dividend stock offers the better mix of income, stability, and upside.

| More on:
Key Points
  • Enbridge stands out as a stable dividend option with a 5.42% yield, supported by diversified revenue streams and a 31-year streak of dividend increases.
  • Suncor offers a 2.86% yield but adds value through share buybacks, giving investors potential for capital appreciation alongside dividends.
  • For those seeking dependable dividend income with less price volatility, Enbridge may be the superior choice, whereas Suncor appeals to those open to greater oil price exposure.

There’s no shortage of great options for investors looking for the next dividend stock to buy. The energy sector, in particular, provides several examples for investors to consider.

Two of the well-known income-producing options from the energy sector are Enbridge (TSX: ENB) and Suncor Energy (TSX: SU).

Both can offer a growing income backed by different business models. But which one is the better dividend stock for investors to own?

Let’s take a look at both.

Oil industry worker works in oilfield

Source: Getty Images

The case for Enbridge

Enbridge is one of the largest energy infrastructure stocks in Canada. The company operates pipelines, energy storage facilities, a natural gas utility, and a growing renewable energy portfolio.

This gives Enbridge several diversified businesses that generate recurring revenue backed by long-term contracts and regulated frameworks.

More importantly, it gives Enbridge a recurring cash flow that is generally less dependent on the day-to-day movement of oil and gas prices. That means the company can predictably invest in growth initiatives from its multi-billion-dollar backlog and pay a handsome quarterly dividend.

As of the time of writing, that dividend carries a yield of 5.42%. This makes the stock one of the higher-paying income options in Canada.

Prospective investors should also note that Enbridge has provided investors with annual bumps to that dividend for 31 consecutive years without fail. The most recent increase was a 3% bump for 2026.

The case for Suncor

Suncor offers a different setup. The company is an integrated energy producer with oil sands operations as well as refining and downstream businesses. That gives investors more direct exposure to energy prices, but its refining operations can also help offset some of the volatility that comes from oil production.

Suncor’s vertical integration is often overlooked by investors, but it’s one of the company’s biggest advantages. On one hand, it gives investors direct exposure to energy prices. On the other, it can also help offset some of the volatility that comes from oil production.

Turning to income, Suncor offers a respectable but lower yield than Enbridge. As of the time of writing, Suncor offers a 2.86% yield. The company has also paid dividends for over a decade, but Suncor’s dividend-growth streak runs back only five years.

That being said, Suncor does reward its shareholders in other ways. Suncor routinely repurchases its shares. In fact, beginning this month, the company plans to increase its monthly share repurchases to $500 million.

This shows how Suncor can be more than a sub-3% dividend stock. Investors get to benefit from the aggressive buybacks and the potential for greater upside when energy markets are favourable.

The better dividend stock is…

While both Enbridge and Suncor are attractive options for investors, for me, Enbridge is the better dividend stock to own.

Suncor’s combination of dividends and share repurchases gives investors several ways to benefit from strong cash generation. If oil prices remain favourable, it could also deliver stronger capital appreciation.

This makes Suncor more appealing to investors who are willing to accept a lower starting yield in exchange for greater exposure to oil prices.

But if I’m looking for dependable dividend income that I can let compound for decades, I would lean more toward Enbridge. Apart from offering a yield that’s nearly double what Suncor offers, Enbridge’s infrastructure-heavy business provides more predictable cash flows and less commodity-price volatility.

Fool contributor Demetris Afxentiou has positions in Enbridge. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.

More on Dividend Stocks

the word REIT is an acronym for real estate investment trust
Dividend Stocks

Want Monthly Cash Flow? This 6.9% Dividend Stock Delivers

This TSX stock offers reliable monthly cash. It has a solid dividend payment history and currently offers a yield of…

Read more »

Blocks conceptualizing the Registered Retirement Savings Plan
Dividend Stocks

You Spent 30 Years Building an RRSP: Here’s How Not to Waste it in Retirement

An RRSP can become “expensive” in retirement if you wait until 71 and then face large, taxable RRIF withdrawals on…

Read more »

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Want a Million-Dollar TFSA? Start With This Boring Decision

A million-dollar TFSA is more likely built by automatic $7,000 yearly contributions than by one “miracle” stock.

Read more »

resting in a hammock with eyes closed
Dividend Stocks

This Canadian Dividend Stock is for People Who Hate Managing Their Investments

This Canadian dividend stock offers growing steady income, making it ideal for investors who prefer spending less time managing their…

Read more »

A worker overlooks an oil refinery plant.
Dividend Stocks

The Wealthy Habit That Matters More Than Finding the Next Ten-Bagger

Getting rich doesn’t require finding one ten-bagger if you consistently invest meaningful amounts over decades.

Read more »

oil pump jack under night sky
Dividend Stocks

1 of The Best Dividend Stocks on the TSX Right Now

This energy company has increased its dividend annually for more than 25 years.

Read more »

Hand Protecting Senior Couple
Dividend Stocks

The Stock You Could Hand Down to Your Grandkids

Brookfield Infrastructure could be one of the quality stocks that could be handed down to your grandkids.

Read more »

dividend growth for passive income
Dividend Stocks

2 Canadian Dividend Stocks That Increase Payments Over Time

These Canadian stocks regularly raise dividends and are a reliable investment to generate a growing income stream.

Read more »