Should Investors Dump Enbridge Stock and Buy This Dividend Champion Instead?

Enbridge (TSX:ENB) is a stock that most Canadians have owned for a long time. After all, it’s a dividend darling with 30 consecutive years of dividend growth and more than 60 years of dividend payment history. It is the reliable retirement partner of many retirees today as it has grown its dividend at a compound annual growth rate (CAGR) of 9%. Does it still have the same growth and returns that made it a retiree’s favorite?

Should Investors Dump Enbridge Stock?

Enbridge is currently transitioning its portfolio from oil pipelines to natural gas pipelines. The transport, storage and distribution of gas now represents more than 50% of turnover. However, this transition has accelerated capital expenditure and increased debt. The misuse of cash has slowed dividend growth from 9.8% in 2020 to 3% since then. The 3% growth will continue until 2026, and 5% dividend growth could be on the horizon from 2027 onwards.

The current scenario of high debt and capital expenditure has made Enbridge less attractive as a medium-term dividend stock. However, the long-term appeal remains intact. If you’ve been accumulating Enbridge stock at a share price of less than $50 over the past few years, you may want to consider holding the stock for steady passive income. The company can continue paying dividends for years to come and even grow them in mid-single digits.

However, if you want to make new investments, there are better options than Enbridge for higher growth over the medium term.

Consider buying this dividend champion instead

The unique point of Enbridge stock was its high dividend growth rate and long dividend history. Since the first one has been delayed, Canadian natural resources (TSX:CNQ) offers an attractive option in the medium term, provided the company maintains dividend growth of 8-9%.

Unlike Enbridge, which has a longer lead time to realize cash flows from pipeline projects, CNQ has a faster turnaround time. It acquires oil sands reserves and begins producing oil. The higher production converts into more cash flow, which is used to pay off debt. Higher production also leads to optimal utilization of refineries, reducing production costs. CNQ incorporates the dividend into a breakeven cost of mid US$40/barrel.

Higher oil prices therefore increase cash flow and dividends. In crisis cycles, lower debt and share buybacks help increase dividend per share. Over the past five years, Enbridge has slowed its dividend growth to 3%, while CNQ increased it to an average annual rate of 23.5%.

With a conservative approach, CNQ could keep its dividend growth around 8-9% as oil prices normalize and debt levels rise to $17 billion, above the $12 to $15 billion range.

What’s a Better Buy in 2026: Enbridge or CNQ?

The best way to decide is to see the dividend return on a $10,000 investment. Although Enbridge has a higher dividend yield of 5.83% than Canadian Natural Resources’ 4.9%, the latter has a higher growth rate. An investment of $10,000 today can buy 152 shares of Enbridge and 214 shares of CNQ. If Enbridge were to increase its dividend by 5% from 2027 and CNQ by 9%, their dividends would be equal in 2028, and CNQ’s would exceed Enbridge’s in 2029.

Year	Enbridge dividend per share	Dividend income on a $10,000 investment	CNQ dividend per share	Dividend income on a $10,000 investment
2025	$3.77	$573.04	$2.35	$502.90
2026	$3.88	$590.23	$2.56	$548.16
2027	$4.08	$619.74	$2.79	$597.50
2028	$4.28	$650.73	$3.04	$651.27
2029	$4.50	$683.27	$3.32	$709.88
2030	$4.72	$717.43	$3.62	$773.77

However, CNQ needs to maintain its 9% dividend growth rate to be more attractive than Enbridge.

Takeaway for investors

When investing, the better stocks are always dynamic, as changing market conditions, management decisions, the company’s fundamentals, and the stock price keep moving.