Investing in top-quality, high-yield dividend stocks can help generate immediate income. While the TSX has several stocks that pay dividends and offer high yields, only a few have sustainable payouts and are committed to enhancing shareholder value.
Against this background, let’s look at a top Canadian stock with a resilient business model, solid dividend payment and growth history, and a well-protected yield of over 6%. Passive-income investors can rely on this fundamentally strong stock to earn worry-free income for years.
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The 6% dividend yield stock
Investors looking for a solid income stock could consider Enbridge (TSX:ENB). The company is known for its payout resiliency, consistent dividend growth, and attractive yield.
The energy company has an uninterrupted dividend payment history spanning more than 69 years. Further, it has increased its dividend annually for 29 consecutive years, reflecting an above-average growth rate of 10% per year over that period. This track record highlights Enbridge’s resilience and its management’s commitment to rewarding shareholders.
Currently, this oil and gas transportation company pays a quarterly dividend of $0.915 per share, which, based on its current market price, yields over 6%.
Why is Enbridge a top income stock?
Enbridge has a stellar dividend payment and growth history. Moreover, the company’s future earnings per share (EPS) and distributable cash flow (DCF)—which directly support its dividend payouts—are expected to rise, positioning Enbridge to increase its dividends in the future.
Its vast network of liquid pipelines connects top supply basins and major demand centres. This strategic positioning allows Enbridge to maintain high utilization rates throughout its pipeline system, providing a solid foundation for earnings and DCF growth.
Enbridge benefits from power-purchase agreements (PPAs), regulated cost-of-service tolling frameworks, and other low-risk commercial arrangements. These long-term contracts and the solid operating model enable it to generate reliable cash flows, supporting its durable dividend payouts and making it an attractive income-generating investment.
Enbridge is focusing on expanding and diversifying its earnings base by investing in both traditional and renewable energy assets. This diversification strategy positions it well to capitalize on growing energy demand. Further, its solid balance sheet and cash flows will help Enbridge pursue strategic acquisitions, which will further bolster its growth.
Enbridge’s growth prospects are strong, supported by a solid backlog of secured projects backed by commercial agreements that align with the company’s low-risk earnings model. The company is also focusing on growth projects that require less capital and investing in regulated utility projects. Moreover, by enhancing its cost structure and boosting productivity, Enbridge is setting itself up for long-term profitability, which will help sustain its ongoing dividend growth.
A reliable choice for income investors
For income-seeking investors, Enbridge is a top stock. Its high yield, resilient dividend payments, and growing earnings base make it a reliable long-term investment. With a payout ratio of 60-70% of DCF, the company’s dividends are well-covered and sustainable. Moreover, Enbridge’s management anticipates mid-single-digit growth in both EPS and DCF per share over the long term. This growth will likely translate into further dividend increases.
Overall, Enbridge is a no-brainer stock for immediate income.
