Enbridge (TSX: ENB) is one of those stocks that everyone knows about and likes for different reasons. Most investors buy Enbridge stock for its dividend. Others like the reliable revenue it generates. Others are focused on its growth potential.
The bottom line is that Enbridge offers investors many different appeals. But where is Enbridge stock heading over the next three years?
Let me try to answer that by stating what it isn’t.
The company isn’t going to be the high-growth, hyped up stock that we’ve seen in the tech sector. Enbridge stock also isn’t going to be a rallying energy producer picking up on commodity prices.
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Enbridge is built for a steady three-year climb
For those unfamiliar with the business, Enbridge is one of the largest energy infrastructure companies on the planet.
The company operates a massive pipeline business that transports natural gas and crude oil. Enbridge also operates a natural gas utility business as well as a growing renewable energy portfolio.
An important distinction here is that Enbridge’s revenue largely comes from contracts or regulated structures. In other words, the pipeline, utility, and renewable assets continue generating revenue even when oil prices move in either direction.
That doesn’t remove volatility entirely, but it adds some defensive appeal. The business should continue delivering stable cash flow through different market conditions. The sheer necessity of utilities and the volumes moved through that pipeline business ensure that.
More importantly, this gives Enbridge a recurring revenue stream that lets the company invest in growth. That’s where the three-year question comes into focus.
Enbridge has a multi-billion-dollar backlog of projects. Several of those projects should come online within that timeframe, while others will move into construction.
Those growth projects and utility assets support earnings
Enbridge is advancing growth projects across its pipeline, gas transmission, utility, and renewable energy businesses.
Many of those projects are large, capital-intensive and need time to complete. That’s why investors should view Enbridge stock as a long-term holding. But once those projects enter service, they begin contributing to earnings and cash flow.
One of those growth opportunities lies in the company’s gas utility operations. That adds to Enbridge’s regulated exposure, which provides a steadier source of growth.
On the renewable energy side, Enbridge has already invested over $12 billion into renewable projects over the past two decades. That investment has helped Enbridge build a portfolio of over 40 facilities in North America and Europe that generate over 5,120 megawatts of net capacity.
Another key reason to own Enbridge stock
The reliable business and growth potential of Enbridge are great reasons to consider investing. But the one reason why investors continue to purchase Enbridge stock is for the dividend that the company offers.
Enbridge has paid a dividend to investors for seven decades without fail. Today, that quarterly dividend carries a yield of 4.98%. That’s one of the better-paying dividends on the market.
Even better, Enbridge has provided investors with annual increases to that dividend going back three consecutive decades without fail. The company also expects to continue that growth streak, backed by the growing cash flow from its growth platform.
Enbridge represents a solid option for investors looking at the next three years. The stock won’t provide the headlines of a tech stock, nor will it double.
Instead, Enbridge stock will keep generating stable cash flow and paying one of the best dividends on the market. This makes it a must-have option for any well-diversified portfolio.
