Is Enbridge Stock a Buy, Sell, or Hold?

Here’s why Enbridge (TSX:ENB) remains a top dividend stock long-term investors may want to consider, despite current risks.

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Investing in the stock market is a great way to put your funds to work and appreciate your capital. There are various ways to approach the stock market to build your financial corpus. One such stock to invest in 2024 to grow your wealth is Enbridge (TSX:ENB), as it is one of the top-performing stocks in the Toronto Stock Exchange. 

Let’s dive more into why Enbridge may be worth a look as a top dividend stock to buy in this current environment.

Pipeline stocks to remain in vogue

Enbridge’s status as one of the largest energy infrastructure companies in North America merits consideration from investors of all types. To put it frankly, Enbridge provides the North American economy with an essential service. Transporting raw crude to refineries to be turned into petroleum products is a necessary business. And with so many geopolitical concerns swirling, reducing our collective reliance on foreign entities for energy is a good thing for domestic policy.

The company’s pipelines are numerous, with most focusing on natural gas and oil sands crude coming out of Western Canada. The company also has a small but growing portfolio of renewable energy, focusing on onshore and offshore wind projects.

Strong performance likely to continue to generate consistent dividend income

The days of Enbridge providing impressive dividend growth are likely behind the company. Enbridge’s management team appears to now be targeting dividend growth of around 3% per year for the foreseeable future.

However, the company’s strong fundamentals do secure the company’s 7.6% current yield, providing income investors with a solid investing thesis to own this stock. Enbridge brought in GAAP (generally accepted accounting principles) earnings of $5.8 billion last year, or $2.84 per common share. Adjusted earnings came in just shy of this number, though many bears point out the company’s rather large debt load and the fact its current earnings don’t cover its existing dividend distributions.

I think that Enbridge has a path forward to grow its earnings to more than cover its dividend, and allow the company to pay down its debt load. This will take time. Thus, I think buying Enbridge stock at current levels is really a matter of time horizon more than anything.

Is now the time to buy Enbridge stock?

The world is phasing out fossil fuels, and there are certainly some structural headwinds facing energy infrastructure companies like Enbridge. That’s something that can’t be disputed.

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However, the company’s network of pipelines represents assets that really can’t be replaced and are necessary. For decades to come, we will require natural gas and oil-related energy products — that’s just a fact.

So, until that changes, I think Enbridge will remain a top bond proxy income investors will want to consider. It’s a buy in my books for its dividend more than anything else (I’m not expecting much on the capital-appreciation front). If that’s your game, this is a stock to own.

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 Chris MacDonald has positions in Enbridge. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.

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