Enbridge Is a High-Yielding Canadian Dividend Stock to Buy Now and Own Forever

Consider adding Enbridge stock to your portfolio, as it still trades below its all-time highs to capture its high-yielding dividend payouts.

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Canada’s energy industry is strong, and when investors consider investing in energy stocks, several high-quality oil stocks easily come to mind. Canada boasts several high-quality energy stocks, and several of them pay investors high-yielding shareholder dividends. Many of the top dividend-paying energy stocks offer yields higher than 5%, and a few pay every month instead of on a quarterly schedule.

Amid the current turmoil in the Canadian stock market, investors can add high-yielding dividend stocks from the Canadian energy sector to their self-directed portfolios. When I think of the top energy stocks based in Canada that pay reliable shareholder dividends, Enbridge (TSX:ENB) is the first name that comes to mind.

Let’s discuss this high-yielding dividend stock to help determine whether you should consider adding it to your portfolio at current levels.

Enbridge

Enbridge is a $110.39 billion market capitalization Canadian multinational pipeline company. It also boasts a sizeable natural gas utility business and a growing number of clean energy assets. Energy companies are typically cyclical. However, Enbridge’s diversified portfolio of infrastructure assets and different business segments allow it to generate healthy cash flows throughout business cycles.

As of this writing, Enbridge stock trades for $54.52 per share, down by 8.66% from its 52-week high. 95% of its customers have investment-grade credit ratings, reflecting Enbridge’s resilient business model.

The Canadian energy infrastructure giant generates 98% of its cash flows through long-term contracts based on cost-of-service agreements. The company can generate steady and stable revenue, shielding the stock from energy price volatility.

Enbridge stock’s resilience came into display amid the pandemic. Most energy stocks worldwide slashed or suspended dividend payouts with the onset of the pandemic. Enbridge stock continued its dividend-growth streak, despite anticipating a challenging financial environment.

A Canadian Dividend Aristocrat, Enbridge stock has increased its shareholder dividends at a compound annual growth rate of 11.6% over the last two decades. At current levels, Enbridge stock boasts a 6.31% dividend yield.

Why it is a buy-and-hold-forever stock

It is no secret that governments worldwide are phasing out fossil fuel reliance. Traditional energy commodities might remain high value and in high demand for several more years, but the future of the energy industry is green. Enbridge stock is a strong player in the energy industry as it stands, but it is also preparing for a greener future through a growing portfolio of clean energy assets.

Considering the medium-term picture, Enbridge is also more protected from market volatility than most energy companies. It is not a company producing oil. It merely generates revenue by renting out its well-established infrastructure to companies that produce traditional energy commodities.

Enbridge primarily relies on long-term leases, making its revenue streams secure enough to help it ride the wave of uncertainty with some degree of protection against commodity price fluctuations.

Foolish takeaway

Since Enbridge sits on assets high in demand and collects passive income, it can be a good business to invest in for the medium and long term. Its latest earnings saw its earnings grow by 86% year over year, its adjusted earnings grew by 16.7%, and its distributable cash flow grew by 8.6%. It can be an excellent addition to your self-directed portfolio while it continues trading for a discount.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.

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