There are few investments on the market today that can boast that they cater to income- and growth-minded investors. Additionally, there are even fewer that can also claim to be one of the most defensive stocks on the market. Finally, that pool of candidates shrinks even further when factoring in a handsome yield of over 7%. The resulting stock, which is also a top energy stock pick, is Enbridge (TSX:ENB)(NYSE:ENB).
All about Enbridge
Most investors have heard of Enbridge, but few will realize just how big the energy behemoth is and the extent of the company’s business.
Let’s start with Enbridge’s pipeline business. To say that the business is huge doesn’t even do it justice. In terms of volume, Enbridge hauls over a quarter of all of the crude produced in North America. The company also moves one-fifth of the natural gas needs of the United States. Let the sheer size and necessity of that sink in for a moment.
That lucrative pipeline business generates a steady stream of revenue from companies that utilize Enbridge’s pipeline network. The business model draws parallels to a toll-road network. If that isn’t enough to convince prospective investors, there’s still another point to note. The price that Enbridge charges is not based on the price of the oil being transported. This means that Enbridge is largely immune to the volatility in oil prices.
Big, dirty oil isn’t the only area Enbridge is invested in. Enbridge is also an energy producer. The company has a growing and diversified renewable energy portfolio with a generating capacity of over 2,000 MW. Enbridge has facilities that include solar farms, offshore and onshore wind farms, as well as hydroelectric sites.
Why not earn some great income from your investment?
One of the main reasons why investors continue to flock to Enbridge is for the company’s dividend. The company offers a quarterly payout, which currently works out to an outstanding 7.66% yield. This easily makes Enbridge one of the best-paying investments on the market and solidifying it as a top energy stock.
Also worth noting is that Enbridge continues to provide annual generous hikes to its dividend going back over a decade.
Part of the reason why that yield is so high can be traced back to the pandemic. Over the trailing 12-month period, the stock price has now dropped 20%. Like most other stocks, Enbridge has been steadily clawing back those losses since the pandemic began. In other words, the current discounted price presents a superb opportunity for long-term investors to buy Enbridge.
Is this top energy stock for you?
Enbridge appeals to nearly every type of investor. The company has a recurring revenue business that generates a handsome dividend. It also operates in a defensive (some might even say necessary) segment of the market. Finally, Enbridge is also expanding into the lucrative long-term field of renewable energy.
In short, Enbridge is the perfect long-term top energy stock. Buy it now and hold it forever.
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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 Demetris Afxentiou owns shares of Enbridge. The Motley Fool owns shares of and recommends Enbridge.