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Enbridge Inc. (TSX:ENB): Is it Too Late to Buy This Top Dividend Stock?

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North America’s largest pipeline operator Enbridge (TSX:ENB)(NYSE:ENB) has had an eye-popping rally during the past six months. Its 25% surge is more than double than what the benchmark, S&P/TSX Composite Index, has produced during that period.

After these impressive gains, many investors are wondering if they have missed the boat. In my view, Enbridge stock still has more room to run, and if you’re one of those investors who wants to add a top dividend stock to your portfolio, you can still make the move. Here are my two top reasons to support that argument.

Improving macro outlook

One important factor that influences the share valuations of large infrastructure stocks such as Enbridge is the central bank’s interest rate policy. When rates fall, these stocks become more attractive due to their higher dividend yields.

In both Canada and the U.S., central banks are done with their rate-hiking cycle after monetary tightening of the past two years. As the economic growth stalls in Canada and the risks to the growth outlook linger, analysts now expect a possible rate cut as the next move by the Bank of Canada.

This is the one top reason that the 6% dividend yield, which Enbridge stock is currently offering, is a great bargain when you compare it with the rates on other investment options, such as GICs. That’s the main reason that the risk/reward proposition that Enbridge offers still makes sense even after the recent gains in its shares.

Enbridge restructuring will pay off

Investors generally stayed on the sidelines during the past two years, as Enbridge undertook a massive restructuring of its business after its acquisition of Spectra Energy in 2017.

The deal increased the company’s debt and raised doubts about the sustainability of its very generous dividend-payout policy.

But the company’s restructuring in the past year has shown that Enbridge is back in the game, and it’s quickly putting its house in order. The operator is on track to conclude the sale of its assets worth $7.5 billion to pay down its debt and improve its financial outlook.

That successful turnaround means that company is in a good position to fulfill its stated goal of a 10% hike in the dividend each year. For income investors, this is a great incentive to buy this dividend stock and earn a steadily growing income stream.

Bottom line

Trading at $50.91 a share at the time of writing, Enbridge pays a $0.7375-a-share quarterly dividend. The company’s debt reduction, its strong organic growth, and its attractive dividend yield make it a top candidate for income-seeking investors, as it has more upside potential.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Haris Anwar owns shares of Enbridge. The Motley Fool owns shares of Enbridge. Enbridge is a recommendation of Stock Advisor Canada.

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