Investors can supplement their income by investing in dividend-paying stocks. However, as the dividend payouts depend on the company’s financial performance, investors should take caution before investing their savings. Notably, one should invest in shares of companies with well-established businesses, diversified revenue sources, a long track record of dividend payments, and a growing earnings base to support future earnings.
Against this setting, Enbridge (TSX:ENB), with its long track record of dividend payments (it’s paid a dividend for over 68 years) and growth (it’s raised the dividend at an annualized growth rate of 10% in the past 28 years), remains income investors’ best friend. Impressively, Enbridge stock pays a quarterly dividend of $0.887 per share, reflecting a stellar yield of 7.67% (based on its closing price on September 12). Let’s delve deeper.
Why is Enbridge a top income stock?
Enbridge is a diversified energy company. It operates an energy infrastructure business. Simply put, the company transports oil and natural gas. Enbridge transports about 30% of the crude oil produced in North America. Moreover, it moves approximately 20% of the natural gas consumed in the U.S. and operates North America’s third-largest natural gas utility by consumer count. Along with a regulated natural gas utility business, the company has a growing portfolio of renewable energy facilities.
As Enbridge plays a key role in energy transportation and exports, its assets witness high utilization, enabling the company to produce solid DCF (distributable cash flows) to support its payouts.
As evident through its payout history, this large-cap company has been uninterruptedly paying and growing the dividend regardless of the economic situation. Investors should note that Enbridge has increased its dividend even amid the COVID-19 pandemic and the recession of 2008. This shows the resiliency of its business model and payouts, making it a dependable bet for income investors.
Investors should note that Enbridge’s regulated cost-of-service tolling frameworks, low-risk commercial arrangements, and power-purchase agreements enable it to generate solid cash flows. In addition, most of its adjusted earnings have protection against inflation. Also, the two-pronged growth strategy, which includes selective investment in conventional assets and complementary lower-carbon platforms (renewables), positions it well to capitalize on long-term energy demand and enhance its shareholders’ value.
Through its investments in low-capital and utility-like growth projects, Enbridge focuses on generating predictable cash flows, which will add stability to its business. Also, its accretive acquisitions are expected to accelerate its growth rate and support future dividend payments.
Earn $1,774/year
Enbridge’s solid dividend payment and growth history, highly diversified revenue base, and focus on generating predictable cash flows make it a reliable investment for investors planning to earn a worry-free income.
| Company | Recent Price | Number of Shares | Dividend | Total Payout | Frequency |
| Enbridge | $46.29 | 500 | $0.887 | $443.5 | Quarterly |
The table above shows that if you buy about 500 shares of Enbridge right now, you can earn $443.5 in passive income every quarter, or approximately $1,774 per year. Moreover, to buy the 500 shares of Enbridge at the recent market price, you would have to invest roughly $23.15K.
