Dividend stocks can pay you to stay on the big ups and downs of the market roller-coaster. And while 2026 is off to a wobbly start, I do think that staying the course and topping up positions on moments of weakness is the way to go, at least for those with a time horizon of more than two years.
With Wednesday’s explosive upside rally driving the S&P 500 and TSX Index higher, many investors are learning first-hand how risky it can be to sell after a sizeable dip in markets. What’s more, though, is it can be quite a chore to get back into the markets as the inevitable bounce happens and investors rush back into their favourite dividend payers, possibly at much higher prices.
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Oil volatility is off the charts
Sometimes, it’s just better to tune out the scary headlines or tune into the bargains to be had if you’re not startled enough to consider lightening up or rotating into momentum plays, like the names within the oil patch, that are reversing course now that oil has tanked below US$100 per barrel following the recent ceasefire between Iran and the U.S. Nobody knows if a resolution can be reached in the next two weeks, but as the Strait of Hormuz gets flowing again, I do think that there’s potential for oil to fall back to or even below US$80 per barrel.
Time will tell if the oil bounce will lead to lasting inflation or if oil prices will normalize closer to US$60 per barrel. Either way, getting paid dividends while things unfold, I think, is the best way to go for those who understand the power of a good dividend and its long-term impact on capital gains.
Enbridge stock is a solid dividend bet, even at a slight premium
So, what’s the best dividend pick to look at right here? I think it’s hard to overlook shares of pipeline play Enbridge (TSX: ENB), which yields 5.1% and held its own quite well as the tides went out on the oil patch during Wednesday’s session. Of course, the oil-sensitive producers took a major hit while the midstream energy players watched the pullback unfold from the sidelines.
Indeed, that’s a major reason why the pipelines are a relatively steady bet and why they could continue to do well, even if oil continues its retreat in the coming weeks and months. At the end of the day, Enbridge and the pipelines provide a service that doesn’t depend on stronger oil prices. Any way you look at it, the cash cow stands out as more of a utility-like play than a “play” on the price movement in a commodity like oil and natural gas.
As energy infrastructure becomes a more important theme in the coming years, especially as AI data centres look to consume more power, I do think that it’s tough to get in the way of the midstream operators. Some skeptics may point to Enbridge stock being a tad overvalued at more than 23 times trailing price-to-earnings (P/E).
While the growth story may very well be priced in at these premium levels, I still think that ENB stock remains a great bet for its lower-beta (currently at 0.80) appreciation potential over the long haul and its bountiful and fast-growing dividend.
