Investing in quality dividend-growth stocks and holding them over the long term is a proven strategy for generating inflation-beating returns. The best dividend stocks allow you to benefit from a steady stream of passive income as well as consistent capital gains. Moreover, you should consider reinvesting these dividends, which will help you purchase additional company shares and drive future payouts higher.
For instance, since the start of 1995, Enbridge (TSX:ENB) has returned 1,640% to shareholders. However, if we adjust for dividend reinvestments, cumulative returns are closer to 6,400%. So, a $1,000 investment in ENB stock in January 1995 would be worth close to $65,000 today.
As past returns don’t matter much to current investors, let’s see if you should buy Enbridge stock while it trades below $65 in April 2025.
Is Enbridge stock a good buy right now?
Enbridge is positioning itself as a first-choice energy provider with an industry-leading, low-risk profile that delivers predictable cash flows and sustainable dividend growth. Enbridge owns and operates a diversified energy infrastructure network spanning liquids pipelines, natural gas transmission, gas distribution, and renewable power.
With approximately $50 billion in growth opportunities through 2030, Enbridge’s four core franchises collectively offer visible growth across diverse business segments. It also expects to deploy about $23 billion in gas transmission and midstream, $10 billion in liquids pipelines, $9 billion in gas distribution and storage, and $7 billion in renewable power.
Enbridge’s financial performance has remained resilient through multiple economic challenges. Notably, it has achieved financial guidance for 19 consecutive years despite navigating through the financial crisis, commodity price collapses, and the COVID-19 pandemic. The TSX giant maintains a strong balance sheet, with 98% of cash flows coming from cost-of-service or contracted agreements and over 95% of its customers being investment-grade.
For investors, Enbridge offers an impressive dividend track record, with 30 consecutive years of increases. Since 2019, dividends have grown at a 4% compound annual growth rate (CAGR). The company projects 7-9% EBITDA (earnings before interest, tax, depreciation, and amortization) growth through 2026, followed by stable 5% growth after 2026 across key metrics including EBITDA, EPS (earnings per share), and DCF (distributable cash flow).
Enbridge’s growth strategy balances traditional energy infrastructure with expanding lower-carbon investments, positioning the company to deliver consistent returns while navigating the energy transition. With a total shareholder return of 12% since 2005, ENB stock has outperformed utility indexes and the broader S&P 500.
What is the target price for ENB stock?
Enbridge expects to increase its DCF to $5.70 per share in 2025, up from $5.6 per share in 2024. Its payout ratio is forecast at 66%, given an annual dividend payout of $3.77 per share in 2025.
Enbridge’s payout ratio is sustainable, providing it with enough flexibility to lower its balance sheet debt and target accretive acquisitions. Moreover, the TSX stock is priced at 11 times forward DCF, which is not too steep.
Analysts tracking Enbridge stock remain bullish and expect it to gain more than 4% over the next 12 months. However, after accounting for its tasty dividend yield of 5.8%, cumulative returns could be closer to 10%.
