1 Magnificent Dividend Stock Down 18 Percent to Buy and Hold Forever 

For investors looking for a top dividend stock to buy at a discount, here’s why Enbridge (TSX:ENB) may be that company.

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The present volatile market has made income-oriented investors seek reliability and stability to secure returns on their investments. In such cases, investing in dividend stocks remains a top option to consider. These are the companies that have a history of paying a portion of their profits to shareholders. But with so many options, how do you find a truly “magnificent” dividend stock? Look no further than Enbridge (TSX:ENB), a Canadian energy infrastructure giant.

Here’s why I think Enbridge is a dividend-paying company that’s worth holding onto for the long-term.

Defensive business model

Enbridge is mostly known for its status as a premier North American energy infrastructure (pipeline) company. That’s true, and that’s the majority of the company’s overall business. However, Enbridge does operate with a diversified business model across five segments: gas transmission and midstream, renewable power generation, liquid pipelines, energy services, and gas storage and distribution.

Enbridge’s revenue did decline 18% year over year in 2023, tied to commodity prices, which declined from previous levels, and other sector-wide issues factoring into this stock’s move lower. However, with a strong dividend yield of 7.4%, this is a top-tier blue-chip stock investors can rely on for steady income over time.

This dividend stock is a powerhouse

Enbridge has provided a remarkable 29-year streak of increasing dividends, which showcases the company’s financial strength as well as commitment towards rewarding various shareholders. Moreover, the management of the business thinks that the dividend growth will tick down towards 5% by 2027 and beyond. This would imply capital appreciation is on the horizon, given the company’s track record of raising its dividends each and every year.

The company has been doing a much better job of focusing its cash flows on paying down debt and improving its balance sheet. So long as these remain the key priorities, I think this is a high-yielding stock which should be bought on the recent dip.

Why buy Enbridge stock right now?

With bond yields coming down in Canada, bond-like proxies in the energy market could see a significant uptick in the coming quarters. For those who believe this first cut is one of many, Enridge’s 7.4% yield will become much more attractive. Add in rising energy consumption over time, and you have a recipe for steady and consistent cash flow growth.

For many long-term income investors, that’s what they’re after. Enbridge’s size, scale, and improving balance sheet make this high-yielding stock one I think is worth buying right now.

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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