TC Energy Navigates Q1 2025 with Strategic Projects and Dividend Resilience

TC Energy Corporation (TRP) delivered a mixed but resilient performance in Q1 2025, balancing operational stability with strategic growth initiatives. While earnings per share (EPS) declined slightly year-over-year, the company highlighted its strong project execution, contracted cash flows, and disciplined capital allocation as pillars of long-term value.

Ask Aime: Could AIME predict the impact of TC Energy's mixed Q1 2025?

Financial Results: Resilience Amid Headwinds

TC Energy reported Q1 2025 comparable earnings of $0.95 per share, down from $1.02 in the prior-year period, reflecting lower Bruce Power availability and higher interest costs. Revenue rose to $3.62 billion, driven by robust natural gas pipeline volumes and power generation. Comparable EBITDA remained flat at $2.7 billion, underscoring the company’s reliance on rate-regulated and long-term contracted assets.

Ask Aime: "Has TC Energy's Q1 2025 performance shown resilience despite headwinds?"

Strategic Projects: The Engine of Growth

TC Energy’s project pipeline remains its crown jewel. Key milestones include:
1. Southeast Gateway Pipeline (Mexico): Now ready for service pending regulatory approval, this 1.3 Bcf/d pipeline is 100% contracted with Mexico’s CFE. Once operational, it will support 10 of 14 planned natural gas power plants by 2030, aligning with Mexico’s energy transition goals.
2. Northwoods Project (U.S. Midwest): A $0.9 billion expansion of the ANR system will add 0.4 Bcf/d capacity, targeting data center demand and coal-to-gas conversions. The project’s 5–7x build multiple reflects TC Energy’s focus on high-return, low-risk investments.
3. Bruce Power MCR Program: The $1.1 billion Unit 5 overhaul, set to begin in Q4 2026, ensures Ontario’s electricity reliability through 2064.

Risks and Regulatory Challenges

Despite strong execution, TC Energy faces headwinds:
- Legal Uncertainty: The Delaware court’s ruling on liability from the 2016 Columbia Pipeline acquisition remains unresolved. An appeal could take years, creating reputational and financial risks.
- FERC Rate Cases: TC Energy has filed requests for increased rates on its ANR and GLGT pipelines, which could boost cash flows—if approved.

Dividend Resilience: A Steady Hand in Volatile Markets

TC Energy maintained its quarterly dividend at $0.85 per share, aligning with its 3–5% annual growth target. With 97% of EBITDA underpinned by contracts or regulated rates, the dividend remains secure. CEO François Poirier emphasized: “Our capital allocation prioritizes returns to shareholders while funding high-quality projects.”

Conclusion: A Balanced Outlook for TRP Investors

TC Energy’s Q1 2025 results highlight a company navigating challenges with discipline. Its $8.5 billion project backlog (including Southeast Gateway and Northwoods) positions it to capitalize on North America’s energy transition, while contracted cash flows shield it from market volatility.

However, risks like the Columbia litigation and regulatory approvals loom large. Investors should weigh the low-risk, dividend-paying nature of TRP against potential delays or legal setbacks. With $10.7–$10.9 billion in 2025 EBITDA guidance and a dividend yield of ~6%, TC Energy remains a compelling play for income-focused investors seeking exposure to critical energy infrastructure.

The path forward hinges on execution: if TC Energy can deliver projects like Southeast Gateway on time and secure regulatory wins, it could outperform peers in an otherwise sluggish energy sector.