Buy 2,653 Shares of This Top Dividend Stock for $10K in Annual Passive Income

Investing in blue-chip TSX dividend stocks such as Enbridge (TSX:ENB) allows you to benefit from a steady stream of recurring income and long-term capital gains.

For instance, in the last 20 years, Enbridge stock has returned 327% to shareholders. After adjusting for dividend reinvestments, cumulative returns are closer to 927%. Comparatively, the TSX index has returned “just” 428% in this period.

So, let’s see if Enbridge remains a top investment choice at the current valuation.

Is Enbridge a good stock to own?

While most investors are chasing high-flying tech stocks, income-seekers should take a closer look at Enbridge, a company that has quietly built an impressive track record of rewarding shareholders.

Among the largest energy infrastructure companies globally, Enbridge has achieved something remarkable. The Canadian company has raised dividends each year for 29 consecutive years, earning its place among the elite “Dividend Aristocrats.” Moreover, these payouts have risen at an annual rate of 10%, which is exceptional for a company in the cyclical oil and gas sector.

Enbridge recently acquired three natural gas utilities from Dominion Energy. The deal makes Enbridge the largest natural gas utility operator in North America, with more than seven million customers, adding a predictable and regulated revenue stream to an already stable and efficient model.

Enbridge’s growth story is far from over, as the TSX giant has already added $7 billion to its secured growth program this year.

The company generates most of its cash flow from long-term contracts, which are linked to inflation, making it relatively immune to fluctuations in commodity prices. An investment-grade balance sheet, a sustainable payout ratio, and the low-risk nature of its businesses make Enbridge a solid option for investors seeking income and stability.

What’s next for the TSX dividend stock?

Enbridge expects adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) growth between 7% and 9% going forward due to tuck-in acquisitions, an expanding base of cash-generating assets, and contributions from the three acquired utilities.

Alternatively, while Enbridge offers an attractive investment case, considering potential risks such as regulatory changes and the long-term energy transition impact on traditional infrastructure companies is essential. Notably, Enbridge is also investing in clean energy solutions, further diversifying its cash flow.

Analysts tracking ENB stock expect adjusted earnings to expand from $2.8 per share in 2024 to $3.2 per share in 2026. So, priced at 18.8 times forward earnings, ENB stock trades at a reasonable valuation given its attractive dividend yield and growth estimates.

Enbridge’s combination of steady dividend growth, strategic positioning in traditional and renewable energy, and visible growth runway should enable the TSX stock to deliver outsized returns over time.

At current prices, the stock’s yield significantly outpaces both treasury bonds and major market indices, making it a worthy addition to dividend-focused portfolios.

The Foolish takeaway

Given Enbridge’s annual dividend payment of $3.77 per share, you would have to buy 2,653 shares of the TSX giant to earn $10,000 in annual dividend income. If Enbridge increases its dividends by 7% annually, the payout will double over the next 10 years.