Enbridge: A TSX Dividend Stock I’d Buy Today

Enbridge (TSX:ENB) stock is still one of the best dividend deals in the TSX today.

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Pipeline

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Enbridge (TSX:ENB) stock has been through some tough times over the past decade. Whether we’re talking about the oil slump of 2014-15 or the coronavirus pandemic and its impact on energy prices, I think it’s safe to say that the company deserves a round of applause for keeping its dividend going strong in the face of such turbulent times. Energy prices have come a long way in recent years. That said, oil’s slipping again, with per-barrel prices now hovering around the US$70 range.

Indeed, this level could be the new normal. As we move into a recession, investors had better be prepared for turbulence in the energy scene. Of course, energy prices are really hard to predict, given a large number of variables and the propensity to fluctuate wildly in the face of unforeseen black swan events. Who would have thought oil would go negative back in 2020?

Enbridge stock: A top pipeline play for passive-income investors

As a pipeline, Enbridge isn’t as sensitive to the day-to-day oil price moves. As long as oil isn’t in the doghouse, its services will be in high demand. Now, that doesn’t mean Enbridge won’t be a wild ride compared to some of the producers. Regulatory hurdles and other company-specific roadblocks are a source of great ups and downs for the firm.

The 0.88 beta implies shares are ever so slightly less choppy than the broader TSX Index. However, Enbridge investors know that it can be a wild ride but a bountiful one given the dividend. Today, shares yield just north of 7%. That’s a juicy payout and one that’s safer than you’d expect.

Enbridge has hiked its dividend through worse times. And I think income investors can expect more of the same from the investor-spoiling firm that shapes its capital structure to fit in the juicy dividend.

At writing, shares are fresh off a 13% correction from 2022 highs. I think this dip serves as a great opportunity for those who missed the rally off those ominous 2020 lows.

A nice upgrade for ENB stock

Recently, Credit Suisse slapped the $104 billion midstream energy behemoth with an upgrade, citing its better understanding of concerns surrounding its Mainline. Indeed, regulatory headlines could continue to act as an overhang for the stock. Looking beyond such headwinds, Enbridge is a cash cow with the means to keep dividend growth coming.

The stock goes for 16.7 times forward price to earnings (P/E). That’s a relatively cheap multiple to pay for one of this market’s most intriguing dividend growers. Typically, you don’t get consistent dividend growth from firms that have stocks yielding more than 7%. Undoubtedly, a yield north of 7% may be viewed as some sort of red flag for some. For Enbridge, the yield is only slightly higher than that of its historical average.

Are there concerns that could weigh heavily over the next year? Sure, but Enbridge has managed through worse times. Regardless of how severe the recession will be, I view Enbridge as a Steady Eddie dividend play in the energy patch.

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 Joey Frenette 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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