TC Energy (TSX: TRP) stock has fallen about 15% from its summer highs, bringing its share price to about $85 and dividend yield to just over 4.1%. For retirees seeking dependable income and long-term capital appreciation, this pullback could be an attractive opportunity to buy a proven dividend payer at a discount.
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A resilient business built for income investors
With a market capitalization of approximately $88 billion, TC Energy operates an extensive natural gas pipeline network spanning Canada, the United States, and Mexico. Its infrastructure transports substantial volumes of natural gas daily, serving more than 30% of North American demand.
What makes the business particularly appealing to retirement investors is its predictable revenue base. Approximately 98% of TC Energy’s comparable EBITDA, a cash flow proxy, comes from regulated assets or long-term take-or-pay contracts. This structure helps insulate cash flows from commodity-price volatility and provides greater visibility into future earnings.
That stability matters when investing for retirement income. Rather than relying on unpredictable commodity prices, investors can benefit from essential infrastructure that customers need regardless of short-term market sentiment.
Growing earnings and a long dividend record
TC Energy’s recent financial performance strengthens the investment case. In the first half of the year, comparable EBITDA increased 13% year over year to $6 billion, while comparable earnings rose 10% to $2 billion. Comparable earnings per share reached $1.93, representing 9.7% growth.
Its diversified operations contributed to these results, with double-digit growth across its U.S. natural gas pipelines, Mexico natural gas pipelines, and power and energy solutions segments. Meanwhile, its Canadian natural gas pipeline business continued delivering steady performance.
The company is also investing in future growth. During the first half of the year, TC Energy placed approximately $2 billion of assets into service, including Ontario’s Bruce Power MCR Unit 3 project and Alberta’s Berland River project. It expects to bring another $1.5 billion of assets into service this year.
Additionally, the company sanctioned approximately $3 billion in projects targeting returns of around 12%. Another $7 billion in potential projects is in advanced commercial discussions, with approvals possible between 2026 and 2031.
These investments could support future earnings and dividend growth. Importantly, TC Energy has paid dividends for more than 60 consecutive years and increased its dividend for over 20 consecutive years. Although past performance cannot guarantee future increases, this record demonstrates a longstanding commitment to shareholder income.
Is the 15% pullback a buying opportunity?
At around $85 per share, TC Energy trades at a blended price-to-earnings (P/E) ratio of around 23. The analyst consensus price target implies roughly 15% upside, matching the stock’s recent decline from its highs.
That potential recovery is appealing, but investors should remember that analyst targets are estimates, not guarantees. A valuation of 23 times earnings also leaves room for disappointment if project costs rise, interest expenses rise, or growth falls short of expectations.
TC Energy’s trailing-12-month payout was well supported by its EBITDA and sustained by a free cash flow payout ratio of about 91%.
The Foolish takeaway
TC Energy looks like a reasonable rebound candidate for retirement income investors who prioritize dependable cash flow, infrastructure growth, and a long dividend history. The dividend stock’s 4.1% yield is nearly double the Canadian stock market’s approximate 2.1% yield.
While the pullback creates a more attractive entry point, investors should buy for the underlying income-generating business — not assume a quick recovery is guaranteed. A dollar-cost averaging strategy to buy on dips may be a lower-risk way to build a position versus a lumpsum buy.
