Regina Marquise
TC Energy has seen a remarkable 31% rise in its share value in 2024, but is there more room to grow? Many investors are contemplating if this energy giant remains a promising buy for those focusing on Tax-Free Savings Accounts (TFSA) or Registered Retirement Savings Plans (RRSP) aimed at maximizing dividends and overall returns.
As it stands, TC Energy’s stock is valued at approximately $68.50, a substantial recovery from its low of $48 earlier this year. However, this is still beneath its 2022 peak of $74, highlighting lingering impacts from past interest rate hikes in Canada and the U.S.
The firm relies heavily on debt for financing major projects, like its 670-km Coastal GasLink pipeline. Initially budgeted at $6.6 billion, this project is expected to cost nearly $14.5 billion upon completion. Rising interest rates in previous years increased borrowing costs, making the stock less appealing to investors during that period. Recent rate cuts have fueled its resurgence.
TC Energy has been proactive in selling non-core assets to reduce debt and strengthen its financial position. With Coastal GasLink and another significant pipeline in Mexico set to become operational in 2025, revenue and cash flow are poised to rise, potentially supporting further dividend growth.
Despite rising inflation and potential economic shifts that could impact borrowing costs, TC Energy offers a stable dividend history, having raised its payout for 24 consecutive years.
For those adopting a buy-and-hold strategy, TRP’s current dividend yield of 4.8% makes it an attractive option. While future interest rate dynamics warrant caution, adding TC Energy to your portfolio might be wise, with opportunities to grow positions on any market dips.
Is TC Energy a Solid Investment for Your Portfolio in 2024?
In 2024, TC Energy has achieved a notable 31% increase in its share value, garnering the attention of investors who are seeking opportunities in Tax-Free Savings Accounts (TFSA) and Registered Retirement Savings Plans (RRSP). As the company rebounds from past financial challenges, investors are closely analyzing whether TC Energy remains a worthwhile addition to their portfolios, particularly with a focus on maximizing dividends and overall returns.
Key Features and Innovations
TC Energy’s current stock valuation of approximately $68.50 marks a recovery from its earlier low of $48 this year. Despite this rebound, the stock still hasn’t reached the peak value of $74 seen in 2022. The company’s financing strategy heavily leans on debt, primarily for substantial projects such as the Coastal GasLink pipeline, which has seen its budget nearly double from an initial $6.6 billion to an anticipated $14.5 billion.
Financial Strategies and Innovations
To address its debt concerns, TC Energy has undertaken strategic sales of non-core assets. This move is designed to stabilize its financial footing, especially ahead of significant projects like the Coastal GasLink in Canada and a major pipeline in Mexico, both slated for operational status by 2025. The successful execution of these projects is expected to enhance revenue streams and improve cash flow, setting the stage for potential dividend growth.
Pros and Cons
Pros:
– Dividend Stability: TC Energy boasts a solid history of increasing dividends for 24 consecutive years, offering investors stable and potentially growing income.
– Dividend Yield: The company provides an attractive dividend yield of 4.8%, making it appealing for income-focused portfolios.
Cons:
– Debt Dependency: Heavy reliance on debt for project financing could pose risks, especially if interest rates rise again, increasing borrowing costs.
– Economic Factors: Investors should stay vigilant about potential economic shifts and rising inflation, which might impact future performance.
Market Insights and Trends
Current trends show a cautious yet optimistic outlook for TC Energy. While recent interest rate cuts have contributed to its share price recovery, the dynamic interest rate environment necessitates careful monitoring. For buy-and-hold investors, TC Energy presents a viable option, with the potential to expand positions during market downturns, thereby capitalizing on stock price fluctuations.
Conclusion
For investors contemplating adding TC Energy to their portfolio, the company offers a compelling investment proposition with its consistent dividend history and recovery trajectory. However, mindful consideration of interest rate risks and debt-related concerns is crucial. As TC Energy navigates its financial strategies, the landscape for TFSA and RRSP investors looks promising, particularly for those willing to hold through market ebbs and flows.
For more information about investing in TC Energy, visit the TC Energy website.
