Written by Amy Legate-Wolfe at The Motley Fool Canada
Enbridge (TSX:ENB) has become the sweatpants of Canadian dividend portfolios. It’s familiar, comfortable, and so widely owned that replacing it can feel strangely personal.
Still, a great company isn’t automatically the best place for every new dollar. Enbridge stock climbed roughly 28% over the past year, pulling the dividend yield down to about 4.9%. That remains attractive, though the easier gains may already be tucked safely in the rear-view mirror.
What are investors really choosing?
The decision shouldn’t come down to yield alone. Income investors need dependable cash today, while long-term investors should also consider how quickly cash flow and the dividend could grow tomorrow.
Enbridge stock remains a formidable option among Canadian energy stocks. Its pipelines, gas utilities, storage assets, and renewable projects produce largely regulated or contracted cash flow. Management expects 2026 distributable cash flow of $5.70 to $6.10 per share, comfortably covering the annual $3.88 dividend within its targeted payout range.
That payout also marked Enbridge stock’s 31st consecutive annual dividend increase. Anyone building a portfolio of Canadian dividend stocks could reasonably continue holding it. The better question is whether another stock offers a more interesting growth runway from here.
TRP
TC Energy (TSX:TRP) operates about 94,000 kilometres of natural gas pipelines across Canada, the United States, and Mexico. Those systems transport roughly 30% of the natural gas consumed across North America, connecting producers with utilities, industrial customers, LNG facilities, and power plants.
That last group matters more than it once did. Data centres, electrification, manufacturing, and LNG exports are increasing demand for reliable power and natural gas. TC Energy sits directly in the middle of that buildout, collecting regulated or contracted revenue as molecules move through its network.
The latest quarter showed what that demand can do. First-quarter comparable earnings before interest, taxes, depreciation and amortization (EBITDA) rose 14% year over year to $3.1 billion. Canadian pipeline deliveries increased 3%, U.S. pipeline flows rose 5%, and deliveries to LNG facilities jumped 12%.
Management also approved the US$1.5 billion Appalachia Supply Project, a Columbia Gas expansion supported by a 20-year agreement. That provides a visible catalyst rather than a hopeful sketch on a napkin.
Earning income
The income gap becomes obvious when the same $7,000 starting amount is applied to each stock. Enbridge stock wins the immediate-income contest by more than $88 annually. TC Energy’s 3.6% yield simply can’t match Enbridge’s 4.9% yield today.
But, can it close the gap? TC Energy increased its quarterly dividend by 3.2% for 2026, to $0.88 per share. Comparable earnings reached $0.99 per share during the first quarter, while management reaffirmed full-year comparable EBITDA guidance of $11.6 billion to $11.8 billion.
The concern is valuation. TC Energy shares have surged about 48% over the past year, leaving the stock around 29 times trailing earnings. That isn’t a bargain-bin entry, even with operating momentum. The balance sheet also carries meaningful leverage, with management working toward a long-term debt-to-EBITDA target of 4.8 times.
Bottom line
So should investors forget about Enbridge? Not quite. Enbridge stock remains the stronger choice for investors who want maximum income today and a longer dividend-growth streak. TC Energy looks more compelling for investors willing to accept a lower starting yield in exchange for faster recent EBITDA growth and exposure to expanding gas-fired power, LNG, and industrial demand.
The smartest move may be to stop treating the pair like sworn enemies. Enbridge can provide the larger income stream, while TC Energy adds a somewhat different growth engine. If TC Energy’s new projects enter service on schedule and leverage keeps moving lower, its smaller dividend could have more room to surprise over the years ahead.
The post Should You Forget Enbridge and Buy This Dividend Stock Instead? appeared first on The Motley Fool Canada.
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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.
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