Investors seeking a reliable dividend yield may consider top dividend-paying companies that generate resilient cash flows and offer sustainable payouts. Notably, companies with diversified revenue streams, a growing earnings base, and a long history of dividend growth are reliable ones to buy and hold for the decades.
One such TSX stock is energy infrastructure provider Enbridge (TSX:ENB), which currently has a yield of over 6%. Moreover, it has a track record of paying and increasing its dividend, as well as weathering every market crash over the past three decades.
Its diversified business model and solid fundamentals position it well to continue to return significant cash to its shareholders for decades, making it a reliable bet for income-focused investors.
Source: Getty Images
Enbridge’s dividend growth and high yield
Enbridge currently offers a quarterly dividend of $0.943 per share, which translates to a per-year dividend of $3.77 per share, resulting in a high yield of over 6% at recent prices.
Thanks to its high-quality earnings, growing distributable cash flows (DCF), and a sustainable payout, Enbridge has uninterruptedly paid and increased its dividend for decades.
For instance, Enbridge has paid dividends for over 70 years and has consistently increased its annual distributions for the last three decades. Enbridge’s dividends have risen at a compound annual growth rate (CAGR) of 9% in the last 30 years. The company’s sustained dividend growth reflects its operational stability and financial discipline.
Catalysts supporting Enbridge’s dividend growth
Enbridge is a leading energy transportation and distribution company, and its operations are relatively insulated from fluctuations in commodity prices. Its extensive network of pipelines and infrastructure assets links major supply areas to critical demand centres. These strategically located assets are expected to witness high utilization, driving Enbridge’s earnings and distributable cash flow (DCF), which will support future payouts.
Moreover, the assets of this large-cap company are supported by long-term contracts, a regulated cost-of-service framework, and power-purchase agreements that ensure steady earnings across commodity and economic cycles.
Enbridge is investing in high-quality growth opportunities across both the traditional and renewable energy spaces. Moreover, its strong portfolio of late-stage development projects and a secured capital growth backlog of $28 billion augur well for growth. Furthermore, its recent strategic acquisitions and operational improvements are expected to enhance its financial performance and dividend payouts.
The company is reducing debt and prioritizing lower-risk, lower-cost projects and utility-style businesses that generate stable earnings and will support dividend increases.
Enbridge maintains a sustainable payout ratio, targeting 60% to 70% of its 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 resilient business model, disciplined capital deployment, and inflation-protected earnings, Enbridge is well-positioned to grow its dividend in the coming years.
The company’s management is optimistic and expects its earnings and DCF to grow by mid-single digits over the next few years. This growth will enable Enbridge to continue increasing its dividend in line with its DCF per share.
