The market is full of superb picks to fit any investor profile and portfolio. Among the vastness of the market, there is one stock that I continue to focus on. In fact, if it were the only stock I could buy and hold, this would be it.
That stock is Enbridge (TSX: ENB), and here’s why you should buy it too.
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Enbridge does much more than you think
What does Enbridge do? Most investors are aware of Enbridge as a pipeline company, and that part is accurate, sort of.
Enbridge operates one of the largest and most complex pipeline systems on the planet. That pipeline business transports massive amounts of both crude and natural gas from refineries and storage facilities across North America each day.
But that’s not all Enbridge does to justify its claim as the one stock to buy and hold.
The company also operates a renewable energy business. That business operates a portfolio of over 30 facilities across North America and Europe. The sites, which include solar, wind and hydro elements, operate much like a utility business.
This also means that just like a utility, Enbridge’s renewable energy sites are bound by long-term regulated contracts that provide a recurring revenue stream, leaving room for growth and a dividend (more on that in a bit).
And speaking of utilities, Enbridge also operates one of the largest natural gas utilities in North America. That business generates a recurring and stable revenue stream, bound by regulated contracts.
Enbridge is a diversified, defensive option for any portfolio
In addition to the recurring and stable revenue streams that Enbridge generates, the company is also known for the defensive appeal of those segments.
The pipeline business alone can be seen as one of the most defensive segments on the market. That’s because of the sheer amount of crude and natural gas hauled each day by Enbridge.
To put that into perspective, Enbridge transports a whopping one-third of all North American-produced crude across its network. Turning to natural gas, Enbridge transports the equivalent of one-fifth of the energy needs of the entire U.S. market.
Throw in the growing importance of the renewable energy business, and the appeal of Enbridge as the one stock to buy and hold becomes evident.
Enbridge pays out one of the best dividends on the market.
One of the main reasons why investors continue to run to Enbridge (present company included) is for the tasty dividend it offers. As of the time of writing, Enbridge offers a quarterly dividend with a yield of 6%.
This means that a $40,000 investment will generate an annual income of $2,400. Incredibly, that’s not the only reason why Enbridge is the stock to buy and hold right now.
That dividend continues to grow. Enbridge has provided annual bumps to that dividend going back three decades without fail. The company also plans to continue that cadence, which further strengthens the appeal of the stock.
Keep in mind that investors who are not ready to draw on that income yet can choose to reinvest those (growing) dividends until needed. This will allow any eventual income to continue growing.
What is your single stock to buy and hold?
No stock, even Enbridge, is without risk. Fortunately, Enbridge offers a well-diversified mix of segments that cater to multiple parts of the energy sector, which can minimize that risk.
Throw in a growing dividend and three decades of increases, and you have, by far, one of the best long-term options on the market.
In my opinion, Enbridge is a great option that should be a core holding in any well-diversified portfolio.
