Enbridge Stock: This Dividend Aristocrat Looks Like a Steal in 2023

Here are some key factors that make ENB a great Canadian dividend stock to buy on the dip in 2023.

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If you’re a dividend investor looking to add some reliable stocks to your portfolio for the long term, the recent broader market decline has apparently opened several opportunities for you. For example, you can consider investing in Enbridge (TSX:ENB) on the dip in 2023 to earn reliable passive income for decades. I am going to share the key reasons that make ENB a must-have dividend stock for long-term investors. First, let’s take a closer look at its recent stock price movement and some main factors behind it.

Enbridge stock price movement in 2023

In 2021 and 2022 combined, Enbridge stock delivered strong 30% positive returns as a sharp recovery in demand for energy products after COVID-19-driven declines led to a massive rally in oil and gas prices. While ENB is not exactly an oil and gas producer, the demand recovery for energy products amid reopening economies led to spectacular financial growth for Enbridge in 2021. This demand could be one of the main reasons ENB was driven higher.

In 2023 so far, however, its share price has seen a 9% value erosion as macroeconomic concerns like high inflation, rapidly rising interest rates, and slowing global economic growth are putting pressure on commodity prices. These are the main triggers of a sell-off in stocks across sectors lately. And ENB stock has been no exception. With this, the stock now trades at $47.79 per share and $96.8 billion in market capitalization.

Excellent history of dividend and financial growth

In case you don’t know it already, Enbridge is a dividend aristocrat with an excellent track record of increasing dividends for the last 28 consecutive years. In the five years from 2017 and 2022, its dividend per share rose 43%. At the current market price, ENB stock offers an attractive annualized dividend yield of 7.4% and distributes its dividend payouts on a quarterly basis.

Enbridge’s robust balance sheet and predictable cash flows are two of the main factors that allow it to distribute a part of its income among investors in the form of dividends. Despite facing global pandemic-related energy sector-wide challenges, the company’s revenue grew positively by 20% in the five years from 2017 and 2022. More importantly, its adjusted earnings during the same five-year period jumped 43%, reflecting the underlying strength of its reliable business model.

What makes ENB stock worth considering now

Besides all these positive factors, Enbridge’s recently renewed focus on further diversifying its revenue streams by expanding its business in the energy export and renewable energy segments makes it even more attractive. For example, the company acquired one of North America’s key crude oil export facilities, Moda Midstream Operating, in a deal worth US$3 billion to advance its U.S. Gulf Coast strategy. Similarly, last year, Enbridge bought an American renewable project firm, Tri Global Energy, which boosts its long-term goals in the renewable energy segment.

While Enbridge’s energy pipeline and gas transmission business is already flourishing, these new efforts could accelerate its financial growth further in the coming years and help its share prices stage a rally, making it worth buying on the dip right now.

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.

The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

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