Canadian investors are finally getting an opportunity to buy top TSX dividend-growth stocks at discounted prices for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on dividend income and long-term total returns.
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Enbridge
Enbridge (TSX: ENB) is one of the largest companies on the TSX with a current market capitalization of close to $150 billion. It was recently valued much higher. The stock currently trades near $66 per share, compared to the 2026 high around $80.
Investors can take advantage of the pullback to buy the stock below the recent bought-deal issue price of $66.85. Several banks bought a total of $3 billion of Enbridge stock at that price. Investment banks rarely get caught out on these deals, so the stock might be getting oversold.
Enbridge raised the funds in order to help finance recent acquisitions. The company announced two deals in the United States that will boost its oil infrastructure presence south of the border. Enbridge is paying US$600 million and US$2.55 billion for operations in the Permian basing and the U.S. Rockies region. These deals continue a trend over recent years where Enbridge has diversified its asset portfolio, with most of the focus on the American energy sector.
Enbridge bought an oil export terminal in Texas in 2021. That deal has proven to be timely as global demand for American and Canadian oil has increased due to disruptions caused by wars in Ukraine and the Middle East. The new assets acquired in the Permian region will connect additional producers in Texas and New Mexico to the export site.
In 2024, Enbridge spent US$14 billion to buy three American natural gas utilities. The addition of these assets made Enbridge the largest natural gas utilities operator in North America just as natural gas demand is expected to surge with the construction of new gas-fired power-generation facilities being built to deliver power to AI data centres. Enbridge’s existing natural gas transmission network already moves 20% of the natural gas used in the United States.
Growth is also coming through the company’s $41 billion capital program, with annual investments running around $10 billion. As the new assets are completed and go into service, the boost to distributable cash flow is expected to be about 5% per year. This should support ongoing dividend growth. Enbridge raised the divided in each of the past 31 years. Investors who buy the stock at the current level can pick up a yield of 5.9%.
Risks
Expectations of higher interest rates in the United States and Canada are responsible for much of the weakness in the stock price over the past two months. Enbridge uses debt to fund part of its growth program, so a jump in borrowing expenses will reduce profits and can cut into cash that is available to raise dividends or pay down debt.
The U.S. Federal Reserve just raised rates and more hikes are expected as high oil prices threaten to drive higher inflation across the broader economy.
The bottom line
Additional downside is definitely possible in the near term, but the current yield pays you well to ride out the turbulence and the dividend growth should continue, even if market conditions get a bit ugly.
Lower entry points would be viewed as an opportunity to add to the position for a buy-and-hold dividend portfolio.
