Investors seeking reliable income often turn to top dividend-paying stocks that offer sustainable and high yields. Dividend stability hinges on a company’s financial health, making it crucial to choose firms with robust business models, diversified revenue streams, a long history of dividend growth, and solid earnings prospects.
Against this background, here is a top TSX stock which currently boasts a yield of over 6% and a dividend track record that has weathered every market crash since 1995.
A 6% dividend stock offering resilient payouts
While the TSX has several top dividend-paying stocks, Enbridge (TSX:ENB) stands out for its resilient payouts, high yield, and ability to consistently increase its dividend. Enbridge’s business model is built for resilience. As a leading energy transportation and distribution company, its operations are relatively insulated from the fluctuations in commodity prices.
The company generates stable, predictable cash flows through a network of pipelines and infrastructure assets that spans North America, connecting energy supply and demand hubs and witnessing a high utilization rate. Moreover, its assets are backed by long-term contracts, regulated frameworks, and power-purchase agreements—commercial arrangements that ensure dependable income and reduce financial risk.
Enbridge’s dividend reliability also stems from its disciplined capital allocation strategy. It maintains a sustainable payout ratio, targeting 60% to 70% of its distributable cash flows (DCF). This means that a healthy portion of earnings is reinvested in the business to fund growth while still leaving a substantial amount to reward shareholders.
Thanks to its high-quality earnings, growing DCF, and a sustainable payout, Enbridge has uninterruptedly increased its dividend since 1995. This consistency reflects its ability to sustain and grow its dividend through various market crashes, including the dot-com collapse, the 2008 financial meltdown, and the COVID-19 pandemic.
Looking ahead, Enbridge’s continued focus on expanding its DCF, along with a strong pipeline of low-risk growth projects, means the company remains well-positioned to pay and increase its dividend.
Here’s what will drive Enbridge’s future dividend higher
This large-cap company delivers reliable performance through all economic and commodity cycles, thanks to its diversified business operations and consistent cash flow. Its strategically located, demand-driven assets are expected to witness high utilization even amid global trade tensions, enabling it to grow its dividend.
Enbridge has recently expanded its footprint by acquiring three major U.S. natural gas utilities, adding to an already robust portfolio of over 200 cash-generating assets and businesses. The company’s earnings are secure, with almost all of its earnings before interest, taxes, depreciation, and amortization (EBITDA) backed by regulated or take-or-pay contracts. That’s a significant buffer in any market as it reduces risk and shields Enbridge from fluctuating energy prices.
Furthermore, over 80% of Enbridge’s EBITDA is also protected against inflation, either through built-in rate escalators or regulated mechanisms. This enables the company to deliver stable and growing returns over time.
Enbridge is likely to benefit from a surge in electricity demand across North America, driven in part by the increasing energy needs of data centres. The company is well-prepared to capitalize on this demand with a strong portfolio of late-stage development projects and a secured capital growth backlog of $28 billion.
Each year, Enbridge plans to deploy between $8 billion and $9 billion toward its secured growth projects. Moreover, it is focusing on debt reduction. The company continues to prioritize lower-risk, lower-cost projects and utility-style assets that generate predictable earnings, supporting dividend increases.
Thanks to its resilient business model, disciplined capital deployment, and inflation-protected earnings, Enbridge is well-positioned to grow its dividend at a mid-single-digit rate for years to come.
