Better Buy: TransCanada Corporation vs. Targa Resources Corp.

It can be tempting to focus on a stock's current dividend yield, since the higher it is, the more money theoretically be flowing into your bank account. However, more often than not, higher yields carry greater risk. That's certainly the case with Targa Resources' (NYSE: TRGP) 7.8% payout, which is barely hanging on by a thread.

TransCanada's (NYSE: TRP) lower payout of 3.9%, on the other hand, is as rock-solid as they come. In fact, the Canadian energy infrastructure giant's dividend appears poised to grow at a healthy rate over the next few years while the payout of its U.S. peer has a high probability of getting reduced even though it now has several expansion projects in the pipeline. That safer payout is just one of the reasons why TransCanada has my vote as the better buy.

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Source: Fool.com