4 Top Canadian Energy Stocks Your TFSA Will Love You for

Canadian Natural Resources Ltd. (TSX:CNQ)(NYSE:CNQ) and three other domestic energy stocks offer passive income to TFSA investors.

TFSA investors take note: the following four stocks are among the best defensive plays on the TSX index outside of financials, with the right mix of value, good health, and passive income for your savings account. From Warren Buffett’s re-investment choice of Suncor Energy (TSX:SU)(NYSE:SU) to the high growth in earnings expected by Vermilion Energy (TSX:VET)(NYSE:VET), let’s see why they’re strong choices.

Suncor Energy

Despite a negative one-year past earnings-growth rate, Suncor Energy has seen positive five-year average growth at 9.1%. A healthy stock with an acceptable level of debt at 39.4% of net worth, Suncor Energy has seen significant volumes of shares bought by insiders in the last three months, showing definite confidence in the stock among those in the know.

This Warren Buffet favourite is fairly valued, with a P/E of 22.2 times earnings matched with a near-market-weight P/B of 1.6 times book giving value investors a fair deal. The passive-income investor will be moderately rewarded with a decent dividend yield of 3.73%, with an expected 20.6% annual rise in earnings adding to a shareholder’s peace of mind.

Enbridge (TSX:ENB)(NYSE:ENB)

Up 2.68% in the last five days at the time of writing, Enbridge is one of the frontrunning Canadian energy stocks for a dividend portfolio. A yield of 6.05% is within the upper tier of TSX index dividend payers, and a 37.3% expected annual growth in earnings shows that this stock is fit for long-term investment.

With more inside buying than selling recently, it’s a little overvalued in with a P/E of 33.5 times earnings, though its per-asset valuation is close to the market average as shown by a P/B of 1.6 times book. While its one-year past earnings growth has been negative at -0.6%, it’s been positive overall for the last five years, with an average growth of 33%.

Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ)

With a P/E ratio of 12 times earnings and P/B of 1.3 times book beating the TSX index, Canadian Natural Resources has been on a bit of a tear of late. Up 2.92% in the last five days, it’s riding high on a positive one-year past earnings growth of 46.6%. However, a negative five-year average of -5.6% coupled with a 2% drop in expected annual growth in earnings is something of a red flag.

Vermilion Energy

Up 1.32% in the last five days at the time of writing, both Vermilion Energy’s one-year and five-year average past earnings-growth rates have been negative. However, with more shares getting picked up than shed by Vermilion Energy insiders over the last three months, it’s a clear buy for passive income and high growth; for the former, see a dividend yield of 8.43%, and for the latter an equally significant 115.8% expected annual growth in earnings.

The bottom line

For all-round strength and health, investors may want to sidestep Vermilion Energy’s high dividend yield and go for a better-valued and sturdier stock like Enbridge, whose yield isn’t too shabby itself. Investors may choose to look past a negative earnings outlook to buy Canadian Natural Resources for its dividend yield of 3.63%, or stick with Suncor Energy with its positive five-year track record.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. Enbridge is a recommendation of Stock Advisor Canada.

More on Dividend Stocks

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Is CNR Stock a Buy, Sell, or Hold for 2025?

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

These top dividend stocks both offer attractive yields and trade off their highs, making them two of the best to…

Read more »

Middle aged man drinks coffee
Dividend Stocks

Here’s the Average TFSA Balance at Age 35 in Canada

At age 35, it might not seem like you need to be thinking about your future cash flow. But ideally,…

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Invest Your $7,000 TFSA Contribution in 2024

Here's how I would prioritize a $7,000 TFSA contribution for growth and income.

Read more »

a man relaxes with his feet on a pile of books
Dividend Stocks

CPP Pensioners: Watch for These Important Updates

The CPP is an excellent tool for retirees, but be sure to stay on top of important updates like these.

Read more »

Technology
Dividend Stocks

TFSA Investors: 3 Dividend Stocks I’d Buy and Hold Forever

These TSX dividend stocks are likely to help TFSA investors earn steady and growing passive income for decades.

Read more »

four people hold happy emoji masks
Dividend Stocks

Love Dividend Growth? Check Out These 2 Income-Boosting Stocks

National Bank of Canada (TSX:NA) and another Canadian dividend-growth stock are looking like a bargain going into December 2024.

Read more »

An investor uses a tablet
Dividend Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock may seem like the best of the best in terms of dividends, but honestly this one is far…

Read more »