I never recommend relying on just one stock for a true set-it-and-forget-it strategy. An exchange-traded fund (ETF), preferably one that tracks a broad market index, is almost always the safer choice. That being said, some companies are less risky than others, and one good rule of thumb is to avoid the ones that cut dividend payouts.
A prime example is BCE Inc. (TSX: BCE), the indebted telecom giant that halved its dividend earlier this year after years of stretching its balance sheet too thin. Management pointed to regulation, inflation, and competition, but the bottom line was that the payout ratio was unsustainable.
Instead of BCE, if I were building a set-it-and-forget-it portfolio of individual dividend stocks, I’d much rather own Enbridge Inc. (TSX: ENB).
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What is Enbridge?
If you’ve ever looked at your gas bill and wondered why you’re paying so much, you’ve probably seen Enbridge’s logo stamped on it. Enbirdge is technically an energy stock, but in practice it operates like a utility.
The company owns and runs one of the largest networks of oil and natural gas pipelines in North America, as well as natural gas utilities and some renewable power projects. Its revenues come primarily from transporting and delivering energy under long-term contracts, so cash flow is steady regardless of commodity price swings.
Like most infrastructure-heavy businesses, Enbridge carries a lot of debt, but that’s normal for a company that invests billions upfront to build pipelines and energy delivery systems. Once operational, these assets generate stable free cash flow for decades, which flows through to shareholders in the form of dividends.
Enbridge’s dividend
Enbridge has one of the longest dividend track records in Canada, with uninterrupted payments stretching back more than 70 years, longer than most investors have been alive.
The company has raised its dividend annually for nearly three decades, with a compound annual growth rate (CAGR) of about 9% over the last 30 years, which has stayed ahead of inflation by a mile.
Importantly, management keeps its dividend payout ratio in a targeted 60–70% range of distributable cash flow (DCF), which keeps it sustainable and safe from a cut.
In December 2024, Enbridge announced a 3% increase to its payout, raising the quarterly dividend to $0.9425 per share. At today’s share price, that works out to a forward yield of about 5.4%.
The Foolish takeaway
If I had to pick between telecoms and critical energy infrastructure, I’d take the latter every time. People may switch phone providers in frustration, but they still need reliable access to heat their homes and fuel supply chains. Enbridge sits at the heart of that system, making it a more dependable set-and-forget stock than BCE.
