This stock may be the most stable income investment I have ever found.
The company owns hundreds of valuable infrastructure properties across North America. Thanks in part to the near-monopoly status it holds on these assets, this firm has managed to pay a dividend to shareholders for 60 consecutive years.
But while you might think this is a mature, stodgy company, this firm is just getting warmed up. Since 1994, the company has increased its dividend to shareholders by 460%. And a number of indicators suggest that this performance could be repeated again in the decades ahead.
Let me explain…
As I wrote last week, I’m a huge advocate for investing in a group of companies I like to call my ‘Forever Stocks’. These are giant, cash-rich companies that have rewarded shareholders for decades. Because of their competitive advantage in the marketplace, these firms have been able to generate excess returns for investors year after year.
When you own stocks like these, you no longer have to worry about inflation, recessions, or flash crashes. These companies are so reliable that you can hold them for the rest of your life. My advice: buy them, leave the certificates in a desk drawer, and let them make you rich.
Of course, such elite companies are rare. There are only a few dozen such firms that are publicly traded in North America. That’s why I wanted to share one such company with you today.
This firm is one of the oldest dividend payers in Canada and I think it could be the best dividend stock in North America: Enbridge Inc (TSX: ENB)(NYSE: ENB), the country’s largest energy transportation company.
Enbridge’s status as a Forever Stock comes down to a few points…
First, pipelines have a built-in cost advantage. No other form of transportation can move oil and gas cheaper once one is in place. The only real threat to a pipeline is another pipeline.
This in and of itself would give a company like Enbridge a large competitive advantage. However, buying the needed right-of-ways and securing approval from regulators needed to lay new pipe is a long and expensive process. That means pipelines rarely face direct competition once in place.
Second, the business is remarkably stable. While energy prices are volatile from year-to-year, the total volume of hydrocarbons flowing through pipelines is remarkably stable. This means Enbridge is nearly immune to recessions and asset bubbles.
Finally, the demand for new energy infrastructure is exploding. New technologies like horizontal drilling and hydraulic fracturing have unlocked billions of barrels of new hydrocarbons. With more energy flowing through its network, Enbridge shareholders can count on many more dividend hikes in the years to come.
While there are no sure things in investing, this company should continue delivering for shareholders through good times and bad. If you don’t already own a Forever Stock like Enbridge, then now is the time to add one to your portfolio.
