Enbridge Inc (TSX:ENB) is one of Canada’s best-known high-yield dividend stocks. Paying $3.77 per $62.73 share each year, ENB has a 6% dividend yield.
A 6% yield is pretty high, but is actually a fairly low yield by Enbridge’s recent standards. From 2016 to 2022, the stock went nowhere, while its dividend rose year in and year out. As a result, the stock typically yielded about 7% in that period. At the lows in the March 2020 COVID crash, you could buy ENB shares at a 12% yield!
Today, Enbridge isn’t quite the high-yielder it once was. However, it still has a yield that is about double that of the TSX Index. Also, the stock has been improving its market performance in recent years, being up 43% in the trailing five-year period. So, Enbridge’s yield isn’t what it used to be. It’s still high though. In this article, I’ll explore how many shares of Enbridge stock you’d need to get $5,000 per year in dividend income.
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About 1,326 shares
With each share paying $3.77 in annual dividends, you’d need 1,326 Enbridge shares to get $5,000 per year total. The shares would cost about $84,500. Here’s how the math on that breaks down:
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Enbridge | $62.73 | 1,326 | $0.9425 per quarter ($3.77 per year) | $1,249.75 per quarter ($4,999 per year) | Quarterly |
As you can see, 1,326 Enbridge shares would pay roughly $4,999 in annual dividends – so, close to $5,000. However, there’s more to the story than that. In the next section, I will explore the topic of dividend growth and how it relates to the amount of income you could ultimately get from Enbridge stock.
Dividend growth
A unique feature of stocks, which contrasts sharply with most bonds, is that their dividends frequently change. Thriving companies often raise their dividends. Failing companies often reduce them or cut them out entirely. Companies that falsely believe they are thriving often raise their dividends when they shouldn’t, leading to financial problems that later require cuts. This contrasts with bonds and GICs, whose interest generally stays the same.
With Enbridge, the long-term trend is one of positive dividend growth. This year, the company hiked its dividend by 3%. Over the last 30 years, the compounded annual dividend growth rate has been 9%. So, this is a company whose dividend has gone up and up over the long term.
It’s important to note that questions can be asked about the sustainability of dividend hikes. Although Enbridge has a great dividend growth track record, it has at times had a payout ratio above one (meaning it paid more in dividends than it earned in profit). Today, Enbridge’s payout ratio is 88%, which is actually fairly comfortable for the pipeline sector. Just remember that no dividend is ever a sure thing.
Foolish takeaway
If everything goes well with Enbridge’s business, those buying its 1,326 ENB shares today will get about $5,000 in annual dividends. If historical trends persist, those dividends will rise over time. The dividend growth isn’t something that you can assume will materialize. But I’d say the $5,000 annual payout is safe for the next few years.
