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Headlines
- Enbridge generates nearly all of its cash flows from long-term contracts or cost-of-service arrangements, providing stable and reliable dividends.
- The company has a long history of paying and increasing dividends, with a current yield of 6.8%.
- Acquiring approximately 375 shares of Enbridge could yield $1,000 in annual dividends, given its financial outlook and recent strategic acquisitions.
Enbridge (NYSE:ENB) stands as one of North America's largest crude oil and natural gas pipeline companies. Its business model is largely insulated from the volatility of oil and gas prices, as 98% of its cash flows stem from long-term contracts or cost-of-service arrangements. This financial stability makes Enbridge one of the most dependable dividend stocks in the energy sector.
For over 69 years, Enbridge has consistently paid dividends and has increased them annually for the past 29 years, with the dividend growing at a compound annual rate of 10% during this period. With a current yield of 6.8%, it is possible to generate $1,000 in annual dividend income by acquiring this stock. Here’s how:
Enbridge, headquartered in Canada, recently announced a quarterly dividend of 0.915 Canadian dollars per share, equating to CA$3.66 per share annually, or $2.67 per share at the current exchange rate. At a trading price of $38.70 per share, acquiring roughly 375 shares, or an expenditure of around $14,515, can provide an annual dividend income of $1,000.
This could be a sound decision given Enbridge's strong performance and high yield. In early August, Enbridge raised its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) outlook for 2024 and maintained its distributable cash flow (DCF) guidance of CA$5.40 to CA$5.80 per share. This DCF comfortably supports Enbridge's annualized dividend of CA$3.66 per share.
Recently, Enbridge acquired two natural gas utilities from Dominion Energy and is on track to acquire a third. It has multiple growth projects in the pipeline, reinforcing its financial stability and growth potential. Earlier this month, Enbridge reaffirmed its financial targets through 2026, which include 7% to 9% growth in adjusted EBITDA, 4% to 6% growth in adjusted earnings per share, and 3% growth in DCF per share. As its DCF increases, so should dividends.
