Each time there’s a point out of dividends, the primary title that pops up in each Canadian’s thoughts is Enbridge (TSX:ENB). The pipeline firm earned this standing from its 60-plus years of dividend-paying historical past and a 30-year dividend development historical past.

However is Enbridge a purchase proper now

Enbridge has elevated its debt to 4.8 occasions Earnings Earlier than Curiosity, Taxes, Depreciation, and Amortization (EBITDA). The larger leverage ratio is due to main acquisitions, which elevated income but additionally prices. The purchases have slowed its dividend development fee to three% because it focuses on decreasing leverage and transitioning to fuel pipelines. It expects to speed up the dividend development fee to five% after 2026.

The acquisitions have elevated Enbridge’s share worth vary from $40–$60 to $60–$70, decreasing its dividend yield to five.5%. Those that invested in it at round a $45–$50 share worth will proceed to take pleasure in the next yield of over 7.5%. It’s a inventory to carry for its dividend yield. Nevertheless, it might not be probably the most enticing dividend inventory to purchase on the present worth level of $68.25, simply 3% beneath its 52-week excessive.

Canada is trying to faucet new export markets amidst tense commerce relations with america. The market has already priced within the pure fuel export alternative, leaving little upside for Enbridge’s share worth. Nevertheless, there’s a danger of draw back if tariffs are extended.

The 5.5% yield, gradual dividend development, excessive leverage, and restricted share worth upside make Enbridge much less enticing proper now.

A dividend large to purchase over Enbridge

A greater power inventory various to Enbridge within the present market is Canadian Pure Assets (TSX:CNQ). Analysts stay bullish on Canadian Pure Assets, citing its sturdy capital allocation technique as a key driver of potential upside. The corporate has operational self-discipline, sturdy execution, and capital allocation transparency.

CNQ incorporates the dividend quantity into its breakeven worth, which is mid-$40/barrel on WTI. This price benefit, mixed with common share buybacks, helps it develop dividends between 2% and 56%.

What determines the dividend development quantity?

CNQ’s free money stream allocation coverage. If its internet debt is above $15 billion, 60% of the free money stream (FCF) is returned to shareholders by dividends and share buybacks. The corporate’s debt elevated to over $17 billion in 2025 because it acquired extra low-depleting reserves and elevated manufacturing. Elevated manufacturing led to larger FCF, offering room for dividend development.

Whereas the capital allocation mannequin appears to be like sturdy, success lies in execution, and CNQ has executed nicely. Despite the fact that oil and fuel costs are anticipated to chill, CNQ is nicely positioned to develop dividends by sturdy double-digit development within the coming years. The one time its dividend development fee slowed to low to mid-single digits was within the 2015 oil disaster and the 2009 Nice Monetary Disaster. This exhibits its resilience to market crises.

Why is Canadian Pure Assets higher than Enbridge within the present market?

In contrast to Enbridge, which is certain by capital-intensive pipeline infrastructure, Canadian Pure Assets has extra flexibility when it comes to manufacturing and distribution. CNQ can promote oil and fuel to anybody on the planet at aggressive charges. Enbridge, however, solely caters to North America, investing billions of {dollars} in constructing pipelines to transmit oil and fuel effectively. The shortage of flexibility makes it much less enticing at excessive valuations.

Whereas each shares are basically sturdy and provides over a 5% yield, CNQ is a greater purchase for its larger dividend development fee. To place it in absolute numbers, a $10,000 funding in every will purchase you 218 shares of CNQ and 146 shares of Enbridge. Contemplating a ten% dividend development fee for CNQ and three% in 2026 and 5% in 2027 for Enbridge, the previous will begin giving larger dividends from 2027 onwards.