If Growth Is Your Game, We Have the Name of the Dividend Stock for You

With 2025 finishing off with a bit of a plunge, with the TSX Index dipping just north of 1% from peak levels, questions linger as to whether the year-end losing streak will be followed by even more weakness as 2026 kicks off. Undoubtedly, despite the rough holiday week of trading and what appears to be a bit of a Santa Claus mini-sell-off, the outlook for the new year is pretty good, with various big banks and market strategists looking for decent gains ahead, with some bulls open to the S&P 500 rising close to or even above the 7,000 mark.

In any case, ending a hot year with a bit of a breather, I believe, could set the stage up very well for another year of gains for the TSX Index. And in this piece, we’ll look at a few bargains that investors may wish to consider with their 2026 TFSA (Tax-Free Savings Account) contribution of $7,000.

So, whether you’re looking for a more defensive dividend payer or a name that can offer the best of both worlds (think growth and yield), consider shares of midstream energy titan Enbridge (TSX:ENB) on weakness.

Enbridge stock is in a bit of a slump, but the dividend is a shining star

Shares of the pipeline firm are down just shy of 7% from their all-time highs, with a market-lagging 6% gains for 2025. While 2026 could be another choppy year for the Canadian oil patch, I do see the leading pipeline firms as more than able to continue marching higher as new pipelines enter service in the next 18 months.

The new year probably won’t have all too many surprises for Enbridge, as it looks to keep raising the bar on its dividend as cash flows continue to rise. Whether we’re talking about new gas storage or pipeline expansions, or the potential for interest rates to fall further in 2026, it certainly seems like the pieces are there to fuel a decent rally for the year ahead.

At the time of this writing, shares have a 5.9% dividend yield. As the AI boom continues to spread to the energy scene, with greater demand for the transmission of natural gas, it looks like Enbridge is well-equipped to serve up a single-digit percentage dividend hike in the new year.

With a rock-solid balance sheet and more than enough financial flexibility to keep investing in predictable cash-flow-generative projects, perhaps it’s time to give Enbridge shares the benefit of the doubt, even if the energy terrain proves bumpier for firms operating upstream.

Shares look to be a bit pricier going into 2026, but that’s okay

Of course, the 21.1 times forward price-to-earnings (P/E) multiple certainly seems to be expensive. On a trailing P/E basis, shares go for close to 26 times.

Given the steadiness of cash flows and the history of dividend growth, some premium, I think, is deserved. But for the patient, there might be an opportunity to scoop up shares at below 20.0 times forward P/E in the new year, especially if the recent bumps in the market road lead to a first-quarter market drop.

Instead of spending the entirety of your 2026 TFSA contribution on the name at $65 and change, perhaps buying a half position now ($3,500) and the other half on a further dip below $60 could be a game plan. Either way, Enbridge is a must-watch, given its reputation as a durable dividend grower to own through all sorts of market “weather.”

The post If Growth Is Your Game, We Have the Name of the Dividend Stock for You appeared first on The Motley Fool Canada.

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More reading

• 2 Stocks Worth Buying and Holding in a TFSA Right Now
• 3 Dividend-Growing Canadian Stocks for Passive Income
• Better Dividend Stock: TC Energy vs. Enbridge
• A Dividend Giant I’d Buy Over Enbridge Stock Right Now
• Which Dividend Stocks in Canada Can Thrive Through Rate Cuts?

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.