BCE (TSX: BCE) and Enbridge (TSX: ENB) are two popular Canadian dividend stocks offering attractive yields for income investors. With their dividend yields currently sitting at about 5.7% and 5.9%, respectively, both deserve consideration. However, when it comes to generating reliable passive income, I believe one has a clear advantage.
While BCE offers an intriguing turnaround opportunity following its dividend reset, Enbridge’s stronger dividend track record, healthier payout ratio, and more predictable growth outlook make it my preferred choice for income today. Here’s why.
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Dividend history and safety: Enbridge has the edge
BCE investors haven’t forgotten the 56% dividend cut in May 2025. The reduction was necessary to address an unsustainable payout and help protect the company’s leveraged balance sheet. Nevertheless, investors should focus on whether today’s dividend is sustainable.
Following the cut, BCE’s dividend appears more manageable. Based on its 2026 free cash flow guidance of $2.1 billion to $2.3 billion, its payout ratio is expected to be approximately 81%. Management is also targeting $1.5 billion in structural cost reductions by 2028, which could strengthen future cash flow. BCE maintains an investment-grade BBB credit rating from S&P and has held its quarterly dividend at $0.44 per share since the reduction.
However, Enbridge offers considerably more dividend certainty. The energy infrastructure giant has paid dividends for more than 70 years and delivered approximately 30 consecutive years of dividend growth. Its recent annual increases had been around 3%.
More importantly, Enbridge targets a sustainable dividend payout ratio of 60–70% of distributable cash flow (DCF). Its stronger BBB+ credit rating from S&P also provides additional financial reassurance.
For investors prioritizing dependable income, Enbridge is the clear pick.
Recent results and growth outlook
BCE’s latest third-quarter (Q3) results showed signs of operational progress, but also highlighted its ongoing challenges. Revenue increased 2.2% year over year to nearly $6.2 billion, while adjusted EBITDA (a cash flow proxy) rose 0.9% to approximately $2.8 billion. Adjusted net earnings declined 5.2% to $695 million.
Operating cash flow increased 16% to $2.2 billion, but free cash flow fell 15% to $854 million, reflecting substantial investments in a fully contracted 300-MW AI data centre project in Saskatchewan and U.S. fibre expansion through Ziply Fiber. The data centre’s first phase is expected to come online in the first half of 2027.
For 2026, BCE expects revenue growth of 1–5% and adjusted EBITDA growth of 0–4%. However, adjusted earnings per share (EPS) could decline 5–11%, while free cash flow is forecast at $2.1 billion to $2.3 billion, down 28–34% from the previous year.
Enbridge, meanwhile, delivered more encouraging quarterly results. Q3 adjusted EBITDA increased 3.9% to $4.4 billion, adjusted earnings climbed 7.7% to nearly $1.1 billion, and adjusted EPS rose 6.5% to $0.49. DCF increased 4.8% to $2.7 billion.
Management reaffirmed its 2026 adjusted EBITDA guidance of $20.2 billion to $20.8 billion and DCF per share guidance of $5.70 to $6.10. It also expects approximately 5% average annual growth in adjusted EBITDA, DCF per share, and EPS over the medium term.
That visibility gives income investors greater confidence in Enbridge’s ability to sustain and gradually grow its dividend.
Valuation and my preferred income stock
Both stocks appear to trade at good valuations. At $30.57 per share at writing, BCE trades approximately 18% below the analyst consensus price target, implying potential upside of nearly 22%. Enbridge, at $66.14, trades about 15% below its consensus target, suggesting upside of approximately 18%.
The bottom line
I’d prefer Enbridge for income. Its slightly higher 5.9% dividend yield, more sustainable payout ratio, stronger dividend growth history, and clearer medium-term growth outlook provide a better mix of income and reliability.
BCE shouldn’t be dismissed, however. Successful execution of its AI data centre investment, U.S. fibre expansion, and cost-reduction initiatives could support a meaningful turnaround and potentially restore dividend growth over time.
