Buy 339 Shares in This Stock for $1,200 in Dividends Each Year

Investment in dividend-paying stocks supplements your income. Fortunately, the TSX has several fundamentally strong companies consistently enhancing their shareholders’ returns through higher dividend payouts. 

However, one must understand that a company’s payouts depend on its financial performance. Thus, the dividend payment is not guaranteed, and a company could suspend it. To avoid future disappointments, it’s essential to focus on shares of companies with established businesses, the ability to grow at scale, and a growing earnings base.

Against this backdrop, I’ll focus on a top Canadian dividend stock that could help you earn a regular income that will grow with you, regardless of the volatility in the market. 

Top stock for a worry-free dividend income

While the TSX has several top dividend-paying companies, investors could consider buying the shares of Enbridge (TSX:ENB). This energy infrastructure company transports crude oil and gas. Furthermore, Enbridge has ownership interests in renewable energy facilities. 

The company’s liquids pipelines transport a significant chunk of the crude oil produced in North America to the refiners and markets in Easter Canada, the U.S., and the Gulf Coast. Thanks to its well-established business and high-quality asset base, Enbridge stock commands a market cap of nearly $100 billion. 

Impressively, this large-cap company has paid a regular dividend for 68 years. Further, its dividend grew at a compound annual growth rate of 10% in the last 28 years — the highest among its peers. What makes Enbridge stock even more compelling is its lucrative dividend yield of over 7%. 

Why is Enbridge a reliable income stock?

Enbridge’s high-quality assets make it an integral part of the energy value chain. As it plays a key role in the energy supply, it benefits from a high utilization rate. Also, its two-pronged growth strategy, including investments in conventional assets and renewable energy sources, positions it well to capitalize on energy demand and return substantial cash to its shareholders. 

It’s worth noting that Enbridge paid and increased its dividend, even during the COVID-19 pandemic when most energy companies reduced or suspended their payouts due to the erosion of demand. This reflects the resiliency of its payouts and cash flows. 

The company benefits from long-term contracts, power-purchase agreements, regulated cost-of-service tolling frameworks, and low-risk commercial arrangements. Moreover, about 80% of its earnings before interest, taxes, depreciation, and amortization has protection against inflation, positioning it well to deliver strong distributable cash flow (DCF) per share and drive higher dividend payments. 

Looking ahead, Enbridge’s multi-billion capital program with a focus on low capital intensity growth and regulated utility-like projects bode well for future payouts. While Enbridge’s dividend remains well-protected, its target payout ratio of 60-70% of DCF is sustainable. 

Bottom line

Enbridge’s solid dividend payment and growth history, resilient business model, focus on low capital intensity growth projects, and energy transition opportunities position it well to enhance its shareholders’ returns through reliable dividend payouts. 

Meanwhile, the table above shows that if you buy about 339 shares of Enbridge right now, you can earn approximately $300 in dividend income every quarter, or about $1,200 per year. To buy 339 shares of Enbridge at the recent market price, one would need to invest about $16,367.