With the S&P/TSX Composite Index continuing its ups and downs, much of the Canadian stock market trades at undervalued levels. The Canadian benchmark index’s weakness has made many Canadians wary of putting more money in the stock market.
Many newer investors tend to pull money out of the markets during volatile conditions. However, savvier and seasoned contrarian investors use downturns as opportunities to buy high-quality stocks at bargain prices.
For income-seeking investors, it is a great opportunity to identify and invest in dividend stocks to leverage inflated dividend yields. If you buy and hold dividend stocks in a Tax-Free Savings Account (TFSA), you can watch the value of your investment grow without incurring capital gains or income taxes.
Successfully using such market environments in your favour requires identifying high-quality stocks capable of delivering significant returns in the long run through capital gains and reliable dividends. Today, we will look at Enbridge (TSX:ENB), a Canadian dividend stock that can be excellent for this purpose.
Enbridge is a $98.54 billion market capitalization multinational pipeline and energy company headquartered in Calgary. The company owns and operates an extensive pipeline network throughout Canada and the U.S., transporting hydrocarbon products used in the region.
In a bid to prepare itself for a future in a greener energy industry, it has also ramped up its presence in the renewable energy industry over the last few years.
Enbridge stock is a reputable dividend stock. It is a Canadian Dividend Aristocrat that has increased its shareholder dividends for the last 27 consecutive years. While plenty of Canadian dividend stocks offer long-term growth through capital gains and dividend income, Enbridge sets itself apart as one of the best dividend stocks on the TSX.
Enbridge is a massive business with operations diversified across the North American economy that is vital to the region.
Transporting almost a fifth of all the natural gas consumed in the U.S., it also has a natural gas utility business, offers energy storage services, and a growing portfolio of renewable energy facilities. Being well-established in an industry with massive barriers to entry, Enbridge enjoys a significant competitive advantage.
Enbridge stock is facing mounting pressure from the inflationary environment and interest rate hikes coupled with geopolitical issues in other parts of the world. However, with its ability to continue growing its payouts, the company looks set. With its expanding renewable energy assets, Enbridge will likely set itself up for a sustainable future in the changing energy industry.
As of this writing, Enbridge stock trades for $46.36 per share. At current levels, it is down by 17.75% from its 52-week high.
If you are looking for safe income during the volatile market environment, you can consider relying on Enbridge stock’s juicy 7.66% dividend yield. Investing at current levels means you can lock in the high-yielding dividends and enjoy returns from capital gains when markets begin to recover as the dust settles.