Why Enbridge Stock Still Looks Like a Winning Investment

Here’s why I think Enbridge (TSX:ENB) stock is a winning investment in 2023 and beyond, despite weak performance.

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The ongoing conflict between Russia and Ukraine is notable, and not only because this week marked the one-year anniversary of the conflict. Energy prices have remained highly volatile and are materiality higher than where they were before the invasion. Thus, for energy producers and energy transport companies, this situation has actually provided a boon for business.

This hasn’t necessarily played out as many would have expected for Enbridge (TSX:ENB), a leading Canadian pipeline operator. The company’s share price is actually lower year over year, meaning its dividend yield of 6.9% remains among the highest in this sector and of its peers.

Let’s dive into why this high-yield stock still looks like a winning investment right now.

Enbridge reports strong Q4 numbers 

Enbridge recently released its quarterly earnings report for the fourth quarter (Q4) of 2022. And what a report this was.

The company brought in adjusted EBITDA (adjusted earnings before interest, taxes, depreciation, and amortization) of $15.5 billion compared to $14.0 billion in 2021. Additionally, the company’s net adjusted earnings of $5.7 billion was also higher on a year-over-year basis compared to the $5.6 billion produced by Enbridge in 2021. 

On these metrics alone, one might suggest that Enbridge stock should be trading higher on a year-over-year basis. Insider buying activity has continued in the quarter, as the pipeline company launched $4 billion in renewable and conventional projects in 2022. As more of its investments in advanced low-carbon transport and CO2 sequestration play out, Enbridge stock could receive a bid from environmentally conscious investors.

One of the top dividend payers in history 

Enbridge’s status as a top dividend stock is one of the key reasons I think this company is worth owning. Indeed, a 6.9% yield is nothing to sneeze at. And on top of this, the company’s 3.2% dividend hike this past quarter is material. If Enbridge continues to hike its dividend (this is its 28th consecutive hike), one could feasibly see a higher yield over time (assuming the same sort of static price action of this stock).

When it comes to dividend-paying stocks, Enbridge is one of the top choices among investors due to its safety and quality. The company holds the most utility-like business model and a 96th percentile long-term risk management relative to its sector.

Bottom line 

Enbridge’s 28 years of consecutive dividend payments are definitely impressive, considering the company’s compound annual growth rate (CAGR) of 10% for its dividends. Over the long term, this is one of the top dividend stocks I think is worth owning in this environment.

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 Chris MacDonald has positions in Enbridge. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.

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