Multiple macro-level concerns, including rising geopolitical tensions, inflationary pressures, and fears about a near-term recession, have heightened economic uncertainties lately. These economic uncertainties are hurting investors’ sentiments and driving stocks lower. The TSX Composite Index fell 9% in June to post its worst monthly losses in over two years.
Given this turbulent market condition, it could be the right time for long-term investors to focus on some fundamentally strong stocks that have an outstanding track record of paying consistent dividends, even in difficult economic conditions. Let’s take a closer look at one such TSX dividend stock.
Enbridge stock
Enbridge (TSX:ENB)(NYSE:ENB) is a Calgary-headquartered oil and gas transportation and energy infrastructure firm with a market cap of about $109 billion. Its shares are continuing to outperform the broader market in 2022 as ENB stock currently trades with about 9% year-to-date gains against TSX Composite’s 11.7% losses. This Canadian energy company’s large pipeline network delivers nearly 20% of natural gas consumed in the United States and 10% of liquid natural gas exports. In addition, it’s responsible for roughly about 25% of North America’s crude oil transports and exports.
Apart from its consistently expanding traditional energy transportation business, Enbridge has accelerated its efforts to build renewable power infrastructure in recent years. Moreover, it has more than 40 diversified sources of predictable cash flow, making it one of the most trustworthy Canadian businesses to invest in for the long term.
Solid dividend track record
When new investors try to pick dividend stocks to invest in, they usually make a mistake by just looking at a stock’s current dividend yield. A higher dividend yield, however, doesn’t make the stock safe to buy and hold for the long term. It makes more sense to rather invest in companies with a long, well-proven track record of consistently increasing their dividends irrespective of economic cycles.
Enbridge, for example, has been increasing its dividend for the last 27 years in a row and currently has a dividend yield of around 6.4%. This factor, along with its stable financial growth, makes ENB one of the most reliable Dividend Aristocrats on the TSX right now. In the five years ending in December 2021, Enbridge’s dividend per share rose by 58%. Even in 2020, when most energy companies faced big challenges due to the global pandemic, ENB raised its dividends by 10%, reflecting the company’s commitment to keep rewarding its investors irrespective of market conditions.
Steady earnings growth
Unlike many of its industry peers, Enbridge is known for its steady earnings growth, which could accelerate further in the coming years with the help of its efforts to expand its presence in crude oil exports and renewable energy segments. In 2021, Enbridge registered a solid 13.4% YoY (year over year) positive growth in its adjusted net profits to $5.55 billion. Street analysts estimate its net profits to cross the $6 billion mark for the first time in 2022 as the demand outlook for energy products remains high.
Given all these positive factors, ENB stock has the potential to hold up and outperform the market, irrespective of market conditions in the coming years.
