A 5% Yield Pipeline Stock That Could Have a Breakout Year

Enbridge offers a 5% yield and stable pipeline cash flows, positioning the stock for a potential breakout year as energy demand and infrastructure needs grow.

Key Points
  • Diverse Income Stream: Enbridge is a top pipeline operator with a diversified mix of infrastructure assets, generating stable, utility-like revenues through long-term contracts in both crude and natural gas sectors.
  • Growth and Expansion Potential: With $8 billion in new projects coming online in 2026 and a $39 billion project backlog, Enbridge is positioned for significant earnings growth and increased cash flow.
  • High Yield and Long-term Viability: Offering a 5.48% dividend yield, Enbridge continuously delivers shareholder value through consistent dividend growth, making it an appealing long-term hold for income-focused investors.

There are few, if any, income stocks that are as well-known by investors as Enbridge (TSX: ENB). Part of the reason for that view is that Enbridge is more than just a pipeline stock. The company offers a diversified mix of business segments that generate cash, leaving ample room for investments and supporting a very appetizing quarterly dividend.

Even more intriguing is the fact that this boring pipeline stock is on the verge of having an exceptionally good year. Here’s a look at what Enbridge offers investors and why it matters right now.

oil pump jack under night sky

Source: Getty Images

Enbridge is the pipeline stock to buy now

Enbridge has built a reputation as one of North America’s primary pipeline operators. The pipeline business is the largest segment of the company, including both crude and natural gas.

In fact, that huge pipeline network is one of the largest and most complex pipeline systems on the planet. Every day, Enbridge hauls massive amounts of both, making the stock one of the best defensive picks on the market.

In case you’re wondering, Enbridge transports one-third of all North American-produced crude and approximately one-fifth of the natural gas needs of the U.S. market.

The pipeline business generates the bulk of Enbridge’s revenue, which is regulated and often bound by long-term contracts. This makes Enbridge operate more like a utility or toll road, generating a passive-income stream from the use of its massive network.

For investors looking at a pipeline stock, this means that the defensive appeal of Enbridge is off the charts. Regardless of how the price of oil moves, Enbridge continues to generate a recurring and stable revenue stream.

What could drive a breakout year for Enbridge

There are several reasons why Enbridge could be on a breakout year.

First, there’s progress on some of the company’s major capital projects. In total, Enbridge has nearly $8 billion of projects coming online in 2026. This will support near-term earnings growth and cash flow.

As impressive as that sounds, Enbridge has a much larger backlog of projects that are valued at nearly $39 billion. Many of those projects are slated to advance further this year as well.

Another potential driver could be the broader energy landscape. Enbridge is often labelled as just a pipeline stock. While the pipeline segments do comprise the largest portion of Enbridge’s earnings, the company is an energy infrastructure company first.

That includes a growing number of renewable energy assets. Those assets are bound by long-term regulatory contracts that generate a recurring and stable stream of revenue for Enbridge.

A 5% yield supported by consistent cash flows

One of the main reasons why investors continue to hold Enbridge is for the company’s quarterly dividend. As of the time of writing, the dividend carries a respectable yield of 5.48%.

This means that investors who can invest $5,000 into the stock will generate an annual income of just under $270. That’s not enough to retire on, but it is enough to generate a few shares each year from reinvestments alone.

Even better is the fact that Enbridge offers growth potential, too. Enbridge has provided investors with generous annual upticks to that dividend for over three decades without fail.

This factor alone makes Enbridge more than just a pipeline stock. It makes Enbridge a solid option for investors to buy now and hold for decades.

Is Enbridge stock right for long‑term investors?

Enbridge offers a mix of income, stability, and potential upside that makes it attractive to investors. Adding to that appeal is Enbridge’s unique defensive moat.

For investors seeking income and exposure to essential energy infrastructure, Enbridge remains a solid option.

While no investment is without risk, Enbridge makes a solid addition to any well-diversified portfolio.

Fool contributor Demetris Afxentiou has positions in Enbridge. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.

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