Finding that perfect passive-income stock can make the difference between needing to work a few extra years or retiring early with an enviable income stream.
Fortunately, there’s no shortage of great options on the market to help realize that passive-income stream.
One of those superb options for investors to consider right now is Enbridge (TSX:ENB). Here’s why Enbridge is the stock to build that passive-income stream and how you can generate a cool $580 each year.
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Meet Enbridge (and all its parts)
Enbridge is an energy-infrastructure behemoth. In fact, it’s one of the largest on the planet. The company is best known for its pipeline business, which generates the bulk of its revenue.
The pipeline operation is run like a toll road. It generates a passive-income stream of its own thanks to long-term supply contracts that keep the crude and natural gas flowing. The amounts hauled are, in a word, massive.
Specifically, Enbridge transports one-third of all North American-produced crude. The company also hauls one-fifth of the natural gas needs of the entire U.S. market. This puts Enbridge in unique company as an incredibly defensive pick for any portfolio.
But that’s not all.
Enbridge’s defensive appeal extends to both its natural gas utility operation and its renewable energy business. Both generate recurring revenue streams backed by long-term contracts. And both serve unique purposes that diversify outside of the core pipeline business.
The renewable energy business comprises approximately 40 facilities located across both Europe and North America. Those facilities include solar, geothermal and wind facilities, adding to that already defensive appeal. The segment continues to grow, with Enbridge having invested over $12 billion in the past two decades.
Turning to the natural gas utility, Enbridge’s operation there is equally impressive. Thanks to a trio of acquisitions over the past years, Enbridge’s natural gas business is now the largest by customer count on the continent, with 7.1 million customers.
Again, that’s bound by long-term, regulated contracts, providing a recurring revenue stream that allows Enbridge to invest in growth and pay that juicy dividend. That dividend is what enables that passive-income stream.
Let’s talk about income
One of the main appeals of Enbridge is its quarterly dividend. The company has been paying out dividends for over seven decades, making it an impressive and stable payer.
Adding to that appeal is growth. Enbridge has amassed an impressive three decades of consecutive annual dividend increases, and plans to continue that cadence.
As of the time of writing, the company offers an impressive 5.83% yield.
This means that a $10,000 investment in Enbridge will net investors 150 shares of the energy infrastructure behemoth. At $3.88 per share (thanks to the recent increase), that works out to $582 in dividends.
Prospective investors should keep two important points in mind.
First, investors who aren’t ready to draw on that income can choose to reinvest it. In case you’re wondering, that $582 can purchase more than eight shares each year, just from reinvestments alone.
That leads me to the second point.
As I noted above, Enbridge’s current streak of over 30 years will continue. This means that investors can expect that income to continue growing with each year.
Enbridge: Passive income and more
As an investment, Enbridge is the complete package. Yes, it can provide a growing source of passive income backed by a recurring revenue stream. But prospective investors should always look beyond that to see the complete picture.
That picture reveals Enbridge to be a solid defensive pick that is investing in growth, diversifying outside its core niche and paying one of the best dividends on the market.
For any investor seeking to establish a passive income with sleep-at-night appeal, there are few options as enticing as Enbridge right now.
