Successful stock market investing is not always about buying incredibly high-growth businesses at low prices and selling when high. Granted, the approach can make for some quick profits. However, it entails considerable risk to your investment capital in unfavourable market conditions.
Identifying and investing in high-quality dividend stocks can be a much better way to build wealth by putting your money to work in the market.
Due to the broader market pullback, several top-notch dividend stocks trade at heavily discounted share prices. Due to the downturn, the dividend yields of several top dividend stocks have become inflated to unbelievably attractive levels. That said, not every high-yielding dividend stock is a good investment.
The underlying business must be fundamentally strong enough to sustain high-yielding dividends for a long time to make it a viable investment. Today, we will look closely at a Canadian Dividend Aristocrat you can consider for this purpose: Enbridge (TSX:ENB).
Even if you have been a stock market investor in Canada for a short time, you might be aware of what Enbridge is and does, even partially. Enbridge is a $101.20 billion market capitalization giant in the Canadian energy industry. Most investors know it best for its extensive pipeline network. However, there is more to this energy company than meets the eye.
Enbridge indeed has the largest pipeline network in North America. The company’s infrastructure is responsible for transporting approximately a third of all the hydrocarbons produced in North America. Additionally, it transports a fifth of all the natural gas that the U.S. consumes.
The company’s revenues do not rely on volatile commodity prices. Rather, the company charges other energy producers based on the volume it transports. This way, the company’s pipeline network generates steady and relatively more stable revenue, owing to a growing demand. When it comes to the energy industry, this business model makes Enbridge a top defensive pick.
Besides an exciting traditional energy business, Enbridge also operates North America’s largest natural gas utility business. The company recently announced a few new acquisitions that have further bolstered this business segment, solidifying the defensive appeal for this dividend-paying stock.
For a dividend stock to be a truly effective long-term investment for wealth growth, it must have the potential to grow shareholder value for years to come.
With climate change becoming increasingly worrisome, world governments are phasing out traditional energy and shifting to cleaner energy sources. This is where the company’s foray into the renewable energy industry solidifies its place as a no-brainer pick for many investors.
Enbridge stock has invested over $8 billion over the last 20 years to grow this business segment. As of this year, it has over 40 renewable energy sites diversified across North America and Europe, boasting a 2,100-megawatt net generating capacity. With further growth for this segment in the coming decades, Enbridge is setting itself up for a thriving future in a greener energy industry.
Besides its growth prospects and defensive qualities, being a reliable dividend stock makes Enbridge an attractive pick. As of this writing, Enbridge stock trades for $47.61 per share, paying its investors quarterly distributions at a juicy 7.69% dividend yield. Enbridge stock is a Canadian Dividend Aristocrat that has raised its shareholder dividends for the last 27 consecutive years.
Year to date, Enbridge stock is down by 10.73%. However, the business is fundamentally strong. Instead of focusing on short-term challenges, it might be better to keep a long-term view.
Looking at Enbridge stock from this perspective makes it too attractive a stock to ignore. Between high-yielding dividends and immense long-term growth potential, it can be an excellent addition to your self-directed portfolio for 2024 and beyond.