Enbridge (TSX:ENB) is up nearly 40% in the past two years. Investors who missed the rebound are wondering if ENB stock is still attractive to buy for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on dividends.
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Enbridge share price
Enbridge trades near $65 at the time of writing. The stock is actually down from its 2025 high of around $70, so investors have a chance to buy on a modest pullback.
The shares went through a rough ride in 2022 and 2023 when the Bank of Canada and the U.S. Federal Reserve aggressively raised interest rates to get inflation under control. Enbridge uses debt to fund its growth initiatives that can cost billions of dollars and sometimes take years to complete. The sharp rise in borrowing costs that occurred as interest rates rose put pressure on profits due to higher interest expenses and drove up borrowing costs on new debt. Investors were concerned that higher debt expenses would cut into cash available for dividends and debt reduction. Some pundits even questioned Enbridge’s ability to maintain the generous dividend.
In late 2023, the central banks signalled they were done raising interest rates. Bargain hunters started buying Enbridge and other pipeline stocks at that point. Rate cuts in 2024 and 2025 provided an extra tailwind.
On the operational side, Enbridge has continued to move forward with its growth program. The company spent US$14 billion in 2024 to buy three natural gas utilities in the United States in a deal that further diversified the revenue stream and made Enbridge the largest natural gas utility operator in North America. These assets, when combined with Enbridge’s existing natural gas transmission infrastructure, position the business to benefit from the anticipated surge in natural gas demand as new gas-fired power generation facilities are built to provide electricity for AI data centres.
Enbridge’s oil transmission infrastructure remains important. The company already carries about 30% of the oil produced in Canada and the United States and is expanding its core Mainline network. Enbridge also owns an oil export terminal in Texas.
Renewables are another part of the business. Enbridge bulked up its solar and wind capabilities in recent years and is building solar facilities to provide power for technology companies that want to have renewables as part of the power mix for their data centres.
In total, Enbridge is working on roughly $35 billion in capital projects. As the new assets are completed and go into service, the company expects to see distributable cash flow rise by about 5% per year beyond 2026. This should support ongoing dividend growth. Enbridge recently raised the dividend by 3%, marking 31 consecutive years of dividend hikes.
Risks
The U.S. Federal Reserve and the Bank of Canada might put further rate cuts on hold for the first part of 2026. Employment in the U.S. is holding up well, and there are concerns that tariffs could drive a new surge in inflation. If inflation jumps, the central banks could potentially be forced to raise rates again to get it back under control. In that scenario, Enbridge’s share prices would likely face new headwinds.
Time to buy?
Income investors can still get a 5.9% dividend yield from ENB stock right now. The distribution should be safe, and any further downside in the share price would be an opportunity to add to the position. If you have some cash to put to work in a dividend portfolio, this stock deserves to be on your radar.
