TFSA Investors: The Best TSX Energy Stocks for Fast-Growing Passive Income

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Written by Chris MacDonald at The Motley Fool Canada

After an excellent year in 2022, energy stocks are set for another stellar performance in 2023. Energy stocks have remained a favourite among investors with most oil and gas stocks dominating the list of top 30 TSX stocks. With an adjusted balance sheet and justifiable payout ratios, some of these energy stocks are excellent dividend payers as well.

Retirees and TFSA (Tax-Free Savings Account) investors primarily look for stocks with quality dividend payment track records to invest in. What they want from their investments is tax-free, steady passive income. One can find a plethora of such stocks in the energy sector. Enbridge (TSX:ENB) and Suncor (TSX:SU) are leading the race when it comes to offering fast-growing passive income to their investors.

Top energy stocks: Enbridge

It is well known to investors that investing in blue-chip stocks is the safest and simplest way of wealth generation owing to their quality dividend payments. Enbridge is such an energy stock that offers fast-growing passive income.

It has an excellent credit rating and a 96th percentile long-term risk management. The stock has a 28-year dividend payment streak that is anticipated to reach 33 by 2027. Currently, Enbridge stock provides a hefty dividend yield of 6.8%. Furthermore, analysts expect that Enbridge will be able to increase its distribution in the 3-7% range long term.

Enbridge’s recent financial report speaks to its ability to continuously hike its dividend. The company’s adjusted earnings came in at $5.7 billion, or $2.81 per common share. This is an improvement, when compared to the $5.6 billion, or $2.74 per common share, reported in 2021.

Enbridge’s EBITDA (earnings before interest, taxes, depreciation, and amortization) growth (from $14 billion to $15.5 billion in 2022) was also significant, leading to yet another dividend hike. The company recently hiked its upcoming dividend by 3.2% to $0.8875 per share ($3.55 annually), maintaining its 28th annual dividend payment streak.

Suncor: Strong gains in Q4 2022

Suncor Energy is a Canadian integrated energy company that deals in offshore oil and gas production, oil sands development, petroleum refining, and marketing operations in Canada and the U.S.

The company recently released its latest quarterly earnings report, which beat analysts’ estimates. The company brought in net income of $2.74 billion, a surge of 76% from the same period in the previous year. It also showed quarterly earnings of $1.33 per share, which handily beat the consensus estimates.

Suncor has exceeded consensus estimates in each of the past four quarters. Revenue of $10.21 billion for the quarter that ended on December 31 2022, surpassed consensus estimates by approximately 5.7%. Analysts at TD Securities also raised their price target from $52 to $53 for Suncor Energy. This was followed up by another price target increase from analysts and National Bank Financial from $54 to $57 per share.

Overall, Enbridge and Suncor are two energy stocks I think are worth a look right now. For those seeking defensive positioning, these are two stocks that create generous passive income.

The post TFSA Investors: The Best TSX Energy Stocks for Fast-Growing Passive Income appeared first on The Motley Fool Canada.

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Fool contributor Chris MacDonald has positions in Enbridge. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.