When it comes to the best dividend stocks to own for the long haul, it’s paramount to find businesses that are essential, consistent, and built to last. These are the kinds of Canadian stocks that provide critical infrastructure, generate significant cash flow, are protected by high barriers to entry, and offer significant dividend yields to investors.
That’s why some of the most reliable dividend-paying stocks are in industries like pipelines, utilities, and other infrastructure businesses – the kind of companies that operate behind the scenes but keep the economy running.
There are several high-quality dividend stocks on the TSX which match that description. But there’s no question that one of the very best is Enbridge (TSX:ENB), the $133 billion Canadian pipeline stock.
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Why is Enbridge one of the best Canadian dividend stocks to buy for its growing yield?
One of the reasons Enbridge is one of the best Canadian stocks to buy for its growing yield is that it isn’t just big; it’s also dominant in its industry. And on top of that, it’s well-diversified.
Enbridge transports about 30% of the crude oil produced in North America. In addition, it carries roughly 20% of the natural gas consumed in the United States, with its vast pipeline network that stretches across the entire continent.
But it’s not just the scale that makes Enbridge so dominant; it’s also the quality of its assets and locations in which it operates. On top of just moving oil and gas, Enbridge owns top-tier infrastructure that links supply basins directly to some of the most strategic refineries and export terminals on the continent.
This gives the company an edge that’s incredibly difficult, if not impossible, for competitors to replicate. That kind of reach and integration creates a durable moat that few companies can match.
And that’s just one part of the business. Enbridge also owns one of the largest utility operations in Canada, providing natural gas distribution to millions of homes and businesses.
Plus, it has been steadily growing its renewable energy portfolio, positioning itself not just for the present, but for the long-term transition happening across the global energy landscape.
So, although Enbridge is returning billions in capital to shareholders every year, it’s still constantly expanding its footprint, which is why it’s one of the best Canadian dividend stocks to buy for its yield.
How much growth potential does Enbridge offer?
Although Enbridge is a massive $133 billion stock, and it won’t ever earn you explosive growth, what it does offer is reliable and consistent growth.
In fact, Enbridge has an incredible track record of consistently expanding its operations and returning cash to shareholders. It has increased its dividend every year for the last three decades, and management continues to expect approximately 5% annual growth through the end of the decade.
Because of its consistent investments in organic growth, as well as the value-accretive acquisitions it integrates into its business and immediately scales up, Enbridge is constantly generating more distributable cash flow each year.
For example, in just the last decade, its earnings before interest, taxes, depreciation, and amortization (EBITDA) have increased at a compound annual growth rate (CAGR) of 14.1%, demonstrating the impressive and consistent expansion of Enbridge’s operations. And this year, analysts estimate Enbridge will increase its EBITDA by another 7.7%
In addition, over that 10-year stretch, its annual dividend has increased at a CAGR of 10.1%. Furthermore, not only does Enbridge continue to increase the dividend, but it also maintains its sustainability.
For example, right now Enbridge is paying out $3.77 per share annually. However, according to Enbridge’s guidance, it expects to generate distributable cash flow per share of $5.50 to $5.90 in 2025. Therefore, even if Enbridge only hits the bottom of that range, the dividend would still only have a payout ratio of 69%.
So, if you’re looking for a high-quality Canadian dividend stock with an attractive yield and years of growth potential ahead of it, Enbridge is unquestionably one of the best to buy now.
