A 4.1% yield does not sound like much, especially when you think about the stocks paying 7% or 8% without much effort. But there is a reason I keep coming back to TC Energy (TSX: TRP) when I think about reliable passive income. Here, the yield is not the headline, the business behind it is.
TC Energy (TSX: TRP) moves natural gas across North America, but nobody writes breathless articles about pipeline maintenance. But it is one of those essential services that keeps the lights on and the furnaces running, and it generates steady, predictable cash flow regardless of what the broader economy is doing.
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TC Energy
TC Energy (TSX: TRP) operates roughly 93,000 kilometres of natural gas pipelines across Canada, the United States, and Mexico. It also owns power generation facilities and a smaller liquids pipeline business. The company moves about 30% of the natural gas consumed in North America, making it one of the largest energy infrastructure players on the continent.
Most of that revenue comes from long-term contracts and regulated assets. That matters because it means cash flow does not swing wildly with commodity prices. TC Energy is not an oil producer on its own, though, but a toll booth operator collecting fees for moving energy from one place to another.
The AI angle that could change everything
Natural gas demand has been flat for years in North America, but things are now starting to change. Tech companies are building data centres at a pace the power grid was not designed to handle. It is no secret that AI models require massive amounts of electricity, and natural gas is the fastest, most reliable way to generate it at scale. TC Energy’s management has talked openly about “generational demand” coming from this shift, and the company is investing heavily in Alberta to prepare for it.
That is not a short-term trend, either. Data centres take years to build, and the power demand they create lasts for decades. TC Energy sits right in the middle of that equation.
What the dividend looks like today
As of this writing, TC Energy is a Canadian energy stock that pays a quarterly dividend of $0.88 per share. That works out to $3.51 annually, which translates to a yield of roughly 4.1% at the current price of $85.53.
That is not enough to retire on its own, but is definitely a payout that stacks up. TC Energy has raised its dividend for 25 consecutive years, including a 3.4% increase for 2026. Management has also said it expects dividend growth of 3% to 5% annually going forward, supported by $6 billion to $7 billion in annual capital spending.
The stock has pulled back roughly 15% from its 52-week high of $100.18. For investors who have watched TC Energy trade at richer valuations for years, that kind of dip is worth paying attention to.
The risks worth understanding
Pipelines are inherently not risk-free. TC Energy carries a significant debt load, and rising interest rates make that debt more expensive to service. The company has been selling assets and working to reduce leverage, but progress takes time.
Regulatory risk is another major factor. Pipeline projects face intense environmental scrutiny, and a change in government policy could slow or block new developments. The Coastal GasLink project in British Columbia is a reminder of how long these builds can take and how much they can cost.
And while AI-driven natural gas demand is a compelling story, it is still a forecast. If data centre growth slows, the tailwind could be weaker than expected.
Foolish takeaway
TC Energy is not going to make anyone rich overnight. The yield is moderate, the growth is steady, and the stock has been stuck in a rut for most of 2026.
But that is exactly what makes it an easy passive income play. The company owns essential infrastructure, generates predictable cash flow, and has raised its dividend every year for a quarter of a century, and that’s no small feat in its own.
For investors who want income they do not have to think about, TC Energy is a stock I would keep coming back to.
