ENB, GEI, TRP, PPL & SU: 5 TSX stocks that are passive income machines

May 04, 2022 10:23 AM EDT | By Sundeep Radesh
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  • The Organization of Petroleum Exporting Countries (OPEC) failed to increase output in April amid capacity woes
  • Canadian energy companies are marching on and may be credited for decreasing the year-to-date (YTD) loss of the TSX Composite Index
  • An increase in free cash flow or distributable cash flow may mean the company has more money to give to shareholders

The Organization of Petroleum Exporting Countries (OPEC) failed to increase output in April amid capacity woes, as per the latest reports. Iraq was the only OPEC country that reportedly boosted output.

However, Canadian energy companies are marching on and may be credited for decreasing the year-to-date (YTD) loss of the TSX Composite Index which currently stands at 1.5 per cent, much better than other global indices.

Today, let’s look at five TSX oil and gas stocks that are passive income-producing machines because of the dividends they dole out.

Enbridge Inc (TSX:ENB)

The price of Enbridge’s stock stood at C$56.30 at market close Tuesday, May 3. ENB has spiked 14 per cent this year and saw its 52-week high of C$59.09 on April 21.

Enbridge reported distributable cash flow of C$10 billion or C$4.96 per share for fiscal 2021. This is up, as in 2020 these were C$9.4 billion and C$4.67, respectively.

An increase in free cash flow or distributable cash flow may mean the company has more money to give to shareholders. And this could mean a rise in the dividends paid in the future.

This year, Enbridge paid a quarterly dividend of C$0.86 on March 1. For each of the four quarters of last year its dividend was C$0.835. So, Enbridge has raised it dividends.

ENB’s dividend yield is 6.11 per cent and its three-year dividend growth is 32.69 per cent. Its price-to-earnings (P/E) ratio is 19.5.

Also read: CPG, MEG, PSK, SSRM & TRQ: 5 TSX no-brainer mid cap stocks for March

Gibson Energy Inc (TSX:GEI)

GEI closed at C$25.38 Tuesday and is up 13.2 per cent (YTD).

Gibson had a distributable cash flow of C$79 million for Q1 2022. That is a C$15 million increase, or 24 per cent.

GEI holders received a C$0.37 dividend per share on March 30. For each of the four quarters last year, they got C$0.35.

GEI’s dividend yield is 5.831 per cent and its P/E ratio is 24.5. Dividend yield is a company’s dividends relative to its stock’s price.

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TC Energy Corp (TSX:TRP)

TC Energy’s stock closed Tuesday at C$69.40. Up 18 per cent this year, the stock saw its 52-week high of C$74.39 on April 8.

TC Energy paid its stockholders a dividend of C$0.90 per share on March 30. In each quarter of 2021, they were paid a dividend of C$0.87.

Another quarterly dividend is expected July 29 and TRP has a P/E ratio of 20.6. Its dividend yield is 5.187 per cent.

Pembina Pipeline Corporation (TSX:PPL)

Pembina’s cash flow from operating activities in 2021 was C$2.65 billion, up from C$2.25 billion in 2020. Per common share, that stood at C$4.82 in 2021 compared to C$4.10 in 2020.

The stock closed at C$48.82 Tuesday and it comes with a monthly dividend of C$0.21. PPL’s dividend yield is 5.162 per cent and P/E ratio is 24.5

Also read: NGEX, CRE, AMX, NFG & AFM: 5 TSXV mining stocks to buy in May?

Suncor Energy Inc (TSX:SU)

Suncor’s stock has spiked over 17 per cent in the last week alone. On April 29, it reached a 52-week high of C$47.89 and it closed Tuesday at C$47.53.

Up 50 per cent on a YTD basis, SU pays a quarterly dividend of C$0.42. Its dividend yield is 3.535 per cent.

The stock has rocketed 92 per cent in nine months and its current P/E ratio is 16.8.

Also read: RY, TD, BNS, BMO & CM: 5 TSX bank stocks as equity markets turn bearish

Bottom line

With OPEC countries failing to increase output and countries possibly looking to reduce their dependence on Russian oil long term, TSX oil and gas stocks may stand to gain.

The S&P/TSX Capped Energy Index has had a bull run this year. It is up 53 per cent YTD.

This whole situation was brought on by reduced output during the pandemic years which compounded with the Russian-Ukraine war and the following sanctions.

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These TSX oil and gas stocks can provide passive income via their dividends. All their P/E ratios are pretty much around the same level.

P/E ratio, essentially, is the amount invested for a dollar earned. By this measure, SU’s stock may provide the most value in terms of returns but it has the lowest dividend yield on this list.

Also read: How does current inflation compare to 1970s stagflation?

Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.


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