Should You Buy Suncor Energy (TSX:SU) or Toronto-Dominion Bank (TSX:TD) Stock for Your TFSA Today?

Suncor Energy Inc. (TSX:SU)(NYSE:SU) and Toronto Dominion Bank (TSX:TD)(NYSE:TD) are two of Canadaโ€™s top companies. Is one a better bet right now?

| More on:

Youโ€™re reading a free article with opinions that may differ from The Motley Foolโ€™s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Owning dividend stocks and using the distributions to buy additional shares can help in investors turn relatively small savings funds into large retirement portfolios.

Letโ€™s take a look at Suncor Energy (TSX:SU)(NYSE:SU) and Toronto Dominion Bank (TSX:TD)(NYSE:TD) to see if one deserves to be on your TFSA buy list today.

Suncor

Suncor raised its dividend by nearly 17% for 2019 amid strong cash flow generated from higher production and solid performances at the downstream assets.

Suncorโ€™s oil sands and offshore oil facilities are best known to investors, but the refining and retail businesses are arguably the reason to own the stock. When oil prices slide, these divisions can actually benefit from higher margins due to reduced input costs. This provides a great hedge when the market is weak.

At the same time, Suncorโ€™s production assets can generate attractive free cash flow when oil prices rally.

Suncor is buying back significant stock under its current repurchase program and saw Q2 2019 production hit a record despite curtailments imposed by the Alberta government.

The stock is down to $38 per share compared to $54 last summer. A rebound in oil prices could be in the cards next year if the U.S. and China sort out their trade dispute and OPEC supply cuts continue as planned.

Investors who buy now can pick up a 4.4% yield.

TD

TD generated $12 billion in adjusted profits last year and is on track to top that level in 2019. Thatโ€™s $1 billion in earnings per month!

The companyโ€™s success come from its strong retail banking operations in both Canada and the United States. TD actually has more branches south of the border than it does in the home country.

Plunging bond yields are helping the Canadian banks reduce fixed-rate mortgage prices while still booking attractive margins. The situation in the past few months should stoke renewed buying in the Canadian and U.S. markets while reducing default threats from current homeowners.

There is a risk we could see an economic downturn due to the ongoing trade tensions between the U.S. and China, and that would be negative for TD and its peers. The stock is holding up relatively well so far. TD trades at $74 compared to $80 at its peak last September.

Dividend growth should continue in line with expected earnings-per-share growth of at least 7% per year. The current payout provides a 4% yield.

Is one a better bet?

TD would probably be the way to go if you want the safer buy-and-hold choice today. However, Suncor appears oversold, and the attractive dividend pays you well to wait for better days.

If you can handle a bit of added volatility, I would probably make Suncor the first pick right now.

Should you invest $1,000 in CGI Group right now?

Before you buy stock in CGI Group, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy nowโ€ฆ and CGI Group wasnโ€™t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the โ€œeBay of Latin Americaโ€ at the time of our recommendation, youโ€™d have $21,058.57!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month โ€“ one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 38 percentage points since 2013*.

See the Top Stocks * Returns as of 2/20/25

This article represents the opinion of the writer, who may disagree with the โ€œofficialโ€ recommendation position of a Motley Fool premium service or advisor. Weโ€™re Motley! Questioning an investing thesis โ€” even one of our own โ€” 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 Andrew Walker has no position in any stock mentioned.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? Youโ€™re not alone. At The Motley Fool Canada, we get it โ€” and weโ€™re here to help. Weโ€™ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Energy Stocks

A person looks at data on a screen
Energy Stocks

Enbridge Stock vs. Cameco: Which One Is a Better Buy on the Dip?

Consider Enbridge (TSX:ENB) and another great momentum play to energize your TFSA.

Read more ยป

man touches brain to show a good idea
Energy Stocks

Trump Tariffs: Are Canadian Energy Stocks Still a Safe Haven for Investors?

Amid Trumpโ€™s tariffs, can Canadian energy stocks still shelter your portfolio? Let's identify the risks and opportunities.

Read more ยป

grow money, wealth build
Energy Stocks

Down 30% From Highs: Is This TSX Growth Stock a Screaming Buy?

This TSX stock may be down now, but don't count it out. With plenty of growth opportunities already underway, nowโ€ฆ

Read more ยป

A worker overlooks an oil refinery plant.
Energy Stocks

Dividend Investors: Top Canadian Energy Stocks for March

These two energy stocks have increased payouts and have strong outlooks, making them potentially ideal picks for dividend investors.

Read more ยป

oil and natural gas
Energy Stocks

3 Top Energy Sector Stocks for Canadian Investors in 2025

Despite ongoing uncertainty amid the tariff war with the U.S., these three TSX energy stocks can be strong long-term holdingsโ€ฆ

Read more ยป

Oil industry worker works in oilfield
Energy Stocks

Is Whitecap Resources Stock a Buy for its 7.8% Dividend Yield?

Whitecap stock's recent merger with Velen sent shares dropping, but this could mean there's a value opportunity.

Read more ยป

oil pump jack under night sky
Energy Stocks

Canadian Natural Resources: Buy, Sell, or Hold in 2025?

This energy stock has certainly made an impression on investors in the past. But with tariffs coming down hard, what'sโ€ฆ

Read more ยป

Offshore wind turbine farm at sunset
Energy Stocks

Best Stock to Buy Right Now: Brookfield Renewable vs TransAlta Renewables?

These two energy stocks look primed to explode, and at these prices, investors would do well to pick them upโ€ฆ

Read more ยป