Canadian dividend investors are searching for discounted TSX stocks to add to their self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolios focused on income and long-term total returns.
Source: Getty Images
Enbridge
Enbridge (TSX: ENB) trades near $70 per share at the time of writing, compared with its 2026 peak of around $80. The pullback in the energy infrastructure giant gives investors who missed the big rally over the past three years a chance to buy ENB on a meaningful dip.
Enbridge continues to grow through a combination of acquisitions and development projects. The company focused much of its expansion in recent years in the United States, where Enbridge spent US$3 billion to buy an oil export terminal in Texas and US$14 billion to purchase three natural gas utilities. The deals diversified the revenue stream and gave Enbridge a broader footprint in the American energy market. The new businesses also complement Enbridge’s existing oil and natural gas transmission pipeline networks that already carry about 30% of the oil produced in Canada and the United States and 20% of the natural gas used by Americans.
Enbridge is working through a $41 billion capital program that is spread across the export, pipeline, gas utility, and renewable energy groups. As the new assets are completed and go into service, the added revenue is expected to help boost distributable cash flow by 5% annually over the medium term. This should support ongoing dividend increases. Enbridge raised the dividend in each of the past 31 years. Investors who buy ENB stock at the current price can get a dividend yield of 5.5%.
Risks
Enbridge’s oil pipeline network moves oil from Canadian producers to refineries in the United States, including all the way down to the Gulf Coast. The United States intends to ramp up imports from Venezuela in the coming years after its recent deal with Venezuela, which will see significant American investment flow into the country to rebuild the oil production capacity. Venezuelan oil is similar to the oil that comes from the Canadian oil sands, so there could eventually be an impact on flows from Canada to the Gulf Coast refineries.
Near-term issues for investors are more connected to inflation. Elevated oil prices are driving up inflation and could force the Bank of Canada and the U.S. Federal Reserve to increase interest rates. Enbridge uses debt to fund part of its growth program, so higher borrowing costs can cut into earnings and reduce the amount of cash available for dividends or debt payment. Rate hikes are unlikely to be as aggressive as they were in 2022 and 2023, but recent increases in yields on government bonds suggest the market is anticipating upward rate moves from the central banks.
Opportunity
Domestic and international demand for natural gas is expected to grow in the coming years. New gas-fired power generation facilities are being built to provide electricity for data centres. Enbridge’s natural gas assets put it in a strong position to benefit from the trend. At the same time, international buyers are lining up to buy liquefied natural gas (LNG) from Canada and the United States to ensure reliable supplies. Enbridge is a partner on the Woodfibre LNG export facility being built on the coast of British Columbia and is building natural gas infrastructure to connect its network to LNG export sites in the United States.
The bottom line
Additional near-term downside is possible for Enbridge’s share price, but the dividend yield pays you well to ride out the turbulence, and the capital program should enable ongoing dividend growth. If you have some cash to put to work, this stock deserves to be on your radar.
