The question for investors now is simple: Can TC Energy generate double-digit returns again this year?
The prospects for 2026 appear promising. The company is currently executing a three-year investment plan that targets 5% to 7% annual growth in adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) through 2028. Specific to 2026, management has targeted EBITDA between $11.6 billion and $11.8 billion. This implies impressive sequential operating profit growth of 6% to 8%, which should provide the liquidity needed to further strengthen the balance sheet.
Here are the specific factors that will likely shape the story of TC Energy stock this year.
Deleveraging: The Key to Valuing TC Energy Stock
The main drag on TC Energy stock has long been its significant debt burden, which exceeded $59 billion as of September 30, 2025. However, the narrative has shifted from risk to progress.
Management is aggressively targeting a debt/EBITDA ratio of 4.75, a significant improvement from a high of 5.4 in 2022. With strict capital discipline and continued earnings growth, the company is well positioned to achieve this target in 2026. This balance sheet recovery is currently a crucial driver of capital gains. With each quarter that TC Energy confirms that it is meeting these deleveraging targets, the risk discount on the stock should shrink, allowing the share price to rise.
The nuclear ‘AI’ factor
In addition to natural gas, TC Energy will receive new attention in 2026 for its exposure to nuclear energy. The company owns a 48.4% stake in the Bruce Power partnership, which is fast becoming a crown jewel.
As a new wave of artificial intelligence (AI) data centers drives the insatiable demand for uninterrupted baseload clean energy, assets like Bruce Power are rising in value. The facility recently extended the asset life by 35 years and saw availability increase to 94% in the third quarter of 2025. With power production expected to peak in 2030, this asset is on track to generate substantial free cash flow, providing TC Energy with greater financing flexibility in the coming years.
Dividend growth and interest rates
Income investors have plenty to watch this quarter. TC Energy’s quarterly dividend currently yields a solid 4.5% through 2026. However, management will most likely increase the dividend during the upcoming earnings event in February.
After the South Bow spinoff disrupted its streak of annual gains, the company is looking to re-establish itself as a top-tier dividend growth stock. An increase of 3% to 5% seems feasible next month, which could raise interest rates to around 4.7%.
Furthermore, as a proxy for utilities, TRP shares remain sensitive to North American interest rate policy. With heavy capital expenditures for the Coastal GasLink project in the rearview mirror and interest rates potentially stabilizing or declining in 2026, the company’s cost of capital could decline. This would make the quarterly dividend even more attractive compared to risk-free assets.
The silly bottom line
Valuation remains the only potential sticking point. With an enterprise value/free cash flow multiple of 71.8, TC Energy stock looks expensive compared to the industry average of 42.5. However, when you look at the company’s above-average revenue and profit growth, other numbers seem reasonable. For example, the stock trades at a price-to-earnings ratio of 19.8, which seems reasonable given its improving asset quality.
Ultimately, TC Energy stock is a mid-market leader rising in a bullish natural gas market, with a nuclear kicker adding unique growth potential to its cash flow prospects.
#Outlook #Energy #Stock