Looking for Safe Income? This Stock Has Raised its Dividend for the Past 29 Years

Enbridge’s commitment to maintain and grow its dividend, high yield, and solid payout history, make it safe income stock.

| More on:
Growing plant shoots on coins

Image source: Getty Images

Investing in dividend stocks is an attractive strategy for earning regular income. However, the abundance of companies distributing dividends makes the selection process somewhat tedious. 

Therefore, to find the right income stock, investors should prioritize companies focused on enhancing their shareholders’ returns through regular distributions with a stellar history of consistent dividend payments and growth. Notably, a company with an extensive track record of both dividend payments and growth is likely to exhibit financial stability and an ability to generate profits in the coming years.

Furthermore, dividends are paid out of profits; thus, it is imperative to concentrate on companies with sound fundamentals and the capacity to expand their earnings irrespective of market conditions. This approach ensures the company can sustain its dividend payouts and grow its distributions annually. 

In light of this, let’s look at a Canadian stock that has raised its dividend for the past 29 years.

A top income stock

When it comes to safe income stocks, Enbridge (TSX:ENB) emerges as a noteworthy choice. Boasting a dividend track record spanning over 69 years, Enbridge is renowned for consistently rewarding its shareholders. The company, primarily involved in oil and gas transportation, had demonstrated resilience by maintaining and increasing its dividends even during economic downturns such as the 2008 recession and the recent pandemic, when numerous energy companies had to suspend or reduce their payouts.

In November 2023, Enbridge announced a 3.1% increase in its dividend per share, resulting in a quarterly payout of $0.9150. This equates to an annualized dividend of $3.66 per share for 2024. While Enbridge has a robust history of distributing dividends, its dividend has exhibited a compound annual growth rate of 10% over the past 29 years.

Its payout history suggests that Enbridge strongly emphasizes growing its dividend. This supports my bull case and indicates that it could continue to increase its annual payouts in the coming years. Enbridge targets a sustainable dividend payout ratio of 60-70% of distributable cash flow (DCF). Moreover, it plans to increase its annual dividend in line with its DCF growth in the medium term. 

Enbridge sports a compelling yield of 7.8%, based on the closing price of $47.14 on December 12. This makes it a reliable stock to earn a worry-free, high yield. 

Bottom line 

Enbridge has a commendable track record of paying and increasing the dividend. Moreover, its robust business model, characterized by a highly diversified range of revenue streams, strong demand, long-term customer contracts, and power-purchase agreements, positions the company favourably for generating significant DCF per share.

Enbridge is poised to benefit from its multi-billion-dollar secured projects and investments in conventional and renewable energy assets. These position the company to capitalize on the long-term energy demand. Besides organic growth, Enbridge’s focus on accretive acquisitions will likely accelerate its growth, further boosting its DCF per share. All these set the stage for continued dividend growth in the coming years.

Overall, Enbridge’s commitment to maintaining and growing its dividend, high yield, and solid fundamentals make it a safe stock for income investors.

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.

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

More on Dividend Stocks

growing plant shoots on stacked coins
Dividend Stocks

4 Ways to Grow $100,000 Into $1 Million in Retirement Savings

Anyone can build a million-dollar retirement portfolio. Here are four ways you could practically grow $100,000 to $1 million.

Read more »

A shopper makes purchases from an online store.
Dividend Stocks

3 Reasons to Buy TFI Stock Like There’s No Tomorrow

TFI stock (TSX:TFII) had a hard 2023, but now it's set up for a solid 2024, with an acquisition that…

Read more »

Dividend Stocks

5 Secrets of TFSA Millionaires

These lesser-known secrets can help you set up the perfect long-term portfolio and achieve a million-dollar TFSA!

Read more »

analyze data
Dividend Stocks

How to Build a Powerful Passive-Income Portfolio With Just $20,000

These fundamentally strong TSX stocks have paid and increased their dividend in all market conditions. Add these stocks to build…

Read more »

Canadian stocks are rising
Dividend Stocks

iShares S&P/TSX Capped REIT Index ETF (TSX:XRE): Why I Like this ETF Better Than a Rental Property

XRE is a great ETF for gaining exposure to the Canadian real estate sector.

Read more »

Payday ringed on a calendar
Dividend Stocks

3 High-Yield Dividend Stocks That Pay Cash Every Month

These three dividend stocks all offer high yields and have sustainable dividends, making them some of the best investments to…

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

3 Stocks That Could Create Lasting Generational Wealth

If you want to start transferring over your wealth, you'll need to actually have some! And these are three stocks…

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background
Dividend Stocks

Down by 25%: Is Canadian Tire Stock a Buy in February 2024?

Take a closer look at this Canadian retail stock if you are looking for low-cost additions to your self-directed portfolio…

Read more »