Suncor Energy (TSX: SU) and Enbridge (TSX: ENB) are energy powerhouses in Canada and North America. Both are essential to the Canadian energy industry, but they operate very different business models. If you are wondering which is the better business to buy for dividends, here are some thoughts.
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Suncor: A smaller dividend yield, but big shareholder returns
With a market cap of $106 billion, Suncor Energy is Canada’s largest integrated energy stock. Integrated means it produces, refines, and retails energy. Suncor produces 761,000 barrels of oil equivalent (BOE) per day. It refines around 471,000 BOE/d and sells around 655,000 BOE/d of refined products.
Suncor has an incredible concentration of high-quality, long-life oil sand and in situ assets in Western Canada. Its oil sands assets have a 25-year proved reserve life, which speaks to the long life of these assets.
Suncor is the stock you want to buy if you want leverage to energy prices. Right now, the war in Iran is keeping energy prices above $80 per barrel. That has created a major windfall for Suncor.
It gets the benefit of a higher realized value from its upstream production. It can also earn higher margins from its refining business. Suncor generated $4 billion in free cash flow (or $3.38 per share) in the second quarter of 2026. This windfall can rise and dip based on energy prices, so investors need to acknowledge that in their investment thesis.
Suncor stock only yields 2.7% today. Suncor has raised its dividend every year since 2022 (after it reduced the dividend for a period). However, its dividend increases have been modest in the mid-single-digit range.
It has preferred to reward shareholders by aggressively buying back stock. Since 2020, Suncor has reduced its shares outstanding by over 20%. With its net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) ratio at only one, Suncor has ample flexibility to continue rewarding shareholders through dividend growth and aggressive share buybacks.
Enbridge: A higher yield, but higher leverage
Enbridge is a much less volatile business than Suncor. With a market cap of $156 billion, it is one of the largest energy infrastructure providers in North America. Its operations are diversified across oil pipelines, gas pipelines, gas transmission/distribution utilities, exports, and renewable power. Enbridge serves an essential purpose in getting the energy society lives on to market.
98% of Enbridge’s income stream is either regulated or contracted under take-or-pay arrangements. 95% of its counterparties have investment-grade credit. This means its revenue stream is predictable and reliable.
However, Enbridge has taken on a heavy debt burden to finance its costly array of assets. It sits with a net debt-to-EBITDA ratio of 4.7 times. This is fine when interest rates are stable. However, stocks like Enbridge tend to have an inverse relationship to interest rates. When interest rates rise, the stocks fall, and vice versa. It’s a risk investors need to factor.
Enbridge pays a hefty 5.4% dividend today. It has a long dividend growth record. However, that dividend growth has slowed more recently. Unlike Suncor, Enbridge has grown its share count by 8% since 2022, so shareholders have accepted some dilution at the cost of its growth ambitions.
Suncor or Enbridge?
To conclude, both of these stocks are decent bets for dividends. Enbridge is the more stable, safe business, but Suncor has more upside if energy prices remain elevated. Suncor has the better balance sheet, so it can be more flexible in how it rewards shareholders. As a result, Suncor would be my pick, despite its lower overall yield.
