Enbridge (TSX:ENB) is often regarded as one of the best long-term investment options on the market. That view has been based on the company’s diverse portfolio of holdings and its well-documented history of providing a juicy dividend. But is Enbridge stock still as good a buy as it once was?
Here’s a look at whether investors should continue to add the energy infrastructure giant to their portfolios.
The case for buying
In many cases, Enbridge is the investment to have in any portfolio. The energy giant operates the largest and most complex pipeline network on the planet, which generates the bulk of its revenue.
Incredibly, that revenue stream is not based on the volatile price of oil and natural gas. Adding to that, Enbridge hauls insane amounts of those commodities. Specifically, the company transports a third of all North American-produced crude, and nearly one-fifth of the natural gas needs of the U.S. market.
In other words, it’s a highly defensive cash-generating operation. But that’s not the only segment that Enbridge operates.
The company also boasts a growing renewable energy portfolio, which is also highly defensive in nature. That portfolio amounts to over 40 facilities located across North America and Europe, which generate a stable and recurring revenue stream.
While the renewable segment is smaller than the pipeline business, it is growing. Over the past two decades, Enbridge has dropped over $9 billion into the segment.
Enbridge also operates the largest natural gas utility in North America. This, too, generates a reliable revenue stream backed by a very defensive operation.
In short, Enbridge generates revenue from multiple defensive sources. This allows Enbridge to invest in growth and pay out a handsome dividend.
As of the time of writing, Enbridge pays out a juicy yield of 7.12%, handily making Enbridge stock one of the better-paying dividends on the market.
Oh, and let’s not forget that Enbridge has provided investors with a juicy annual uptick to that dividend for a whopping three decades without fail.
The case for selling
Existing shareholders of Enbridge may have a different opinion. Despite that reliable revenue stream and insane dividend, Enbridge has somewhat lacked when it comes to growth.
In fact, over the trailing five-year period, Enbridge stock has only appreciated 4%. And over a more recent two-year span, the stock is down nearly 9%.
That’s hardly something that growth-seeking investors will want, especially if those investors are on shorter timelines.
For those investors, giving up that insane yield may be a decent trade-off for shorter-term growth.
The case for holding
Finally, some investors may just want to wait and see. This would be existing holders of Enbridge stock who are generating an income or reinvesting those juicy dividends and are not concerned with the lack of growth.
Investors who have especially long timelines may want to consider this option.
Doing so allows investors to benefit from that insane yield and use it through reinvestments to fuel growth. And because of Enbridge’s storied history of providing upticks and commitments to continue that cadence, that decision could be lucrative over the long term.
In short, existing shareholders of Enbridge stock may see the company as an awesome buy-and-forget candidate.
What should you do about Enbridge stock?
Every single investment, even the most diversified, has some risk. That position is certainly true in the case of Enbridge. Despite its very defensive core, the stock has had limited growth over the years, if at all.
Prospective investors should see the decision to buy Enbridge as a long-term play. The stock may lack growth over the prior years, but it does pay out a juicy income. And Enbridge has provided annual ticks to that dividend for decades.
In my opinion, owning Enbridge stock is a great long-term investment that should be a core holding in any well-diversified portfolio.
