Buy 500 Shares of This Super Dividend Stock for $1,830/Year in Passive Income

This super dividend stock offers high yield and visibility over earnings growth. It can help you earn $1,830 in passive income.

| More on:
Canadian Dollars

Image source: Getty Images

Investors eyeing immediate passive income could invest in shares of companies with solid fundamentals and decades of dividend payment history. Fortunately, the TSX has several such top dividend-paying stocks that have paid and even increased their dividends despite ongoing volatility in the market. The steady payouts of these companies make them super dividend stocks, with the ability to pay and grow their dividends regardless of the economic situation.

Against this backdrop, let’s explore a super dividend stock offering an ultra-high yield. Further, its management sees dividend growth as a primary component of its value proposition. This commitment shows that the company could continue to increase its dividends in the upcoming years. Thus, by buying 500 shares of this super dividend stock, you can earn an annual passive income of $1,830/year.

The super dividend stock

Speaking of a super dividend stock, Enbridge (TSX:ENB) stands out. This energy infrastructure company transports oil and gas. What sets it apart is the durability of its dividend payouts regardless of economic and commodity cycles.

For example, Enbridge has been paying dividends for over 69 years and was among a few Canadian companies that paid and even increased their dividends during the COVID-19 pandemic. It’s worth noting that most energy companies either reduced or suspended their payouts amid the pandemic, which shows the resiliency of their payouts.

Enbridge is also known for its consistency in raising dividends, regardless of economic ups and downs. It has increased its dividend for 29 consecutive years. Further, its dividends have grown at a compound annual growth rate of 10% during the past 29 years — the highest among its peers.

While Enbridge is a dependable income stock, its high yield of 7.7% (based on June 21st closing price of $47.50) and visibility over future earnings and cash flow growth make it a super dividend stock. With this background, let’s understand why Enbridge could continue enhancing its shareholders’ returns with higher dividend payments.

Enbridge to enhance shareholders’ value

Enbridge’s assets play an important role in North America’s energy transportation sector. As Enbridge moves a significant amount of oil and gas, it enjoys high asset utilization rates, which supports its earnings and distributable cash flow (DCF). Consequently, this allows Enbridge to consistently pay and increase dividend payments.

In addition, Enbridge boasts a highly diversified revenue base, which adds a layer of stability to its earnings and cash flows. Moreover, its earnings are based on long-term contracts and power-purchase agreements, which enable it to manage volume and price risks effectively. Thanks to its diversified income stream and contractual arrangements, Enbridge generates steady cash flow in all market conditions.

The energy company employs a dual growth strategy. It is expanding its renewable energy assets. Moreover, it continues to invest in conventional sources of energy. Thanks to its balanced investment approach, Enbridge is poised to capitalize on long-term energy demand, which will support its financials and dividend payments.

In addition to growing organically, Enbridge focuses on accretive acquisitions, which bolster its cash flows and contribute to dividend growth.

Looking ahead, the company’s management sees its earnings per share (EPS) and DCF per share growing at a mid-single-digit rate in the long term. The continued growth in earnings and DCF will help Enbridge increase its dividend by a low- to mid-single-digit rate during the same period.

Bottom line

Enbridge’s resilient business model, stellar dividend payment history, visibility over future payouts, and high yield suggest that investors can rely on this super dividend stock. The table below shows that by buying 500 shares of Enbridge, investors can make a passive income of $457.50 per quarter or $1,830/year.

CompanyRecent PriceNumber of SharesDividendTotal PayoutFrequency
Enbridge$47.50500$0.915$457.5Quarterly
Price as of 06/21/2024

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

Golden crown on a red velvet background
Dividend Stocks

Dividend Powerhouses: Canadian Stocks to Fuel Your Portfolio

These two top Canadian dividend aristocrats are some of the top stocks on the TSX to buy now and hold…

Read more »

Dial moving from 4G to 5G
Dividend Stocks

This Undervalued Dividend Stock is Worth Buying Right Now

Want an undervalued dividend stock with long-term potential and a juicy yield? Here's an option you may regret not buying…

Read more »

A worker gives a business presentation.
Dividend Stocks

1 Stock I’m Buying Hand Over Fist in July Despite the Market’s Pessimism

This top dividend stock is going through a rough patch, but don't let that count out all the growth we've…

Read more »

person on phone leaning against outside wall with scenic view at airbnb rental property
Dividend Stocks

2 TSX Stocks Poised to Have a Big Summer

Restaurant Brands International (TSX:QSR) stock and another darling that could be too cheap to ignore this summer.

Read more »

HIGH VOLTAGE ELECRICITY TOWERS
Dividend Stocks

Forget Fortis Stock: Buy This Magnificent Utilities Stock Instead

Looking for high dividends and returns? Then I'm sorry, but Fortis (TSX:FTS) stock probably isn't for you.

Read more »

Increasing yield
Dividend Stocks

2 High-Yield (But Slightly Risky) Stocks to Keep Your Eye on

Have these top TSX dividend stocks finally bottomed?

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks I’d Buy if They Fall a Bit

Any near-term decline in these two top Canadian dividend stocks will make them look even more attractive.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Got $3,000? 3 Dividend Stocks to Buy and Hold for the Long Term

You can buy these three Canadian dividend stocks with an investment as low as $3,000 right now and expect to…

Read more »