Dividend-paying stocks with solid fundamentals and a proven payout history are a smart choice for investors seeking instant passive income. Notably, the TSX has several such companies that paid and raised their dividends despite the heightened volatility in the market. The steady dividend payments of these companies make them reliable investments to earn recurring cash.
Against this backdrop, let’s explore a high-yield Canadian stock offering reliable payouts and a commitment to dividend growth.
Enbridge: A high-yield stock for instant income
Enbridge (TSX: ENB) stands out for its high yield and consistent record of dividend payments and growth. This energy infrastructure company has been paying dividends for nearly seven decades. Moreover, it raised its dividends at a compound annual growth rate (CAGR) of about 10% over the past 29 years.
The energy giant pays a quarterly dividend of $0.915 per share. This translates into a compelling yield of 6.8% based on a closing price of $53.60 as of August 23.
Enbridge’s high yield and dependable payouts make it a solid income stock. Further, the company is poised to enhance its shareholders’ value with higher dividend payments in the coming years.
Enbridge to increase its dividend
Enbridge is famous for its stellar dividend payments and growth, even in challenging market conditions. Moreover, its relatively resilient business model, long-term contractual arrangements, and sustainable dividend payout ratio of 60-70% of distributable cash flow (DCF) suggest that Enbridge could continue to increase its dividends in the coming years.
As one of North America’s leading energy infrastructure companies, Enbridge transports significant volumes of oil and gas. Its extensive pipeline network connects major supply basins to demand centres, resulting in a high utilization rate of its assets. This, in turn, boosts Enbridge’s earnings per share (EPS) and DCF.
Moreover, Enbridge’s dividend payments are backed by power purchase agreements (PPAs), long-term contracts, and regulated cost-of-service tolling frameworks. These arrangements drive higher earnings and ensure steady dividend payouts, even amid market volatility.
Enbridge’s management expects its EPS and DCF to grow at a CAGR of around 5% over the long term. This earnings growth should enable the company to increase its dividend at a low-to-mid single-digit rate in the future.
Enbridge is also investing in conventional and low-carbon energy assets, positioning itself to benefit from rising energy demand. Moreover, its focus on projects with low-risk, predictable cash flows and efforts to diversify its revenue streams strengthen its long-term growth potential.
Enbridge’s secured project backlog of approximately $24 billion provides a solid foundation for future earnings growth and stable dividend payments. Further, its strong balance sheet, strategic acquisitions, cost structure improvements, and productivity initiatives are expected to drive future earnings and payouts.
Bottom line
Enbridge offers high yield and steady dividend income with potential for future growth. The energy infrastructure company’s diversified cash flows, contractual arrangements, a strong pipeline of growth projects, and growing earnings base suggest that investors can rely on Enbridge stock for stable and instant income.
