The Dividend Stock I’d Pick Over Enbridge Stock, and Why I Keep Coming Back

A dividend is a company’s way of distributing profits available to shareholders. This profit is what remains after funding capital expenditures, servicing debt, and covering other operating expenses. Most Canadians have accumulated Enbridge (TSX: ENB) shares over the years as it offered a dividend yield of over 6% and double-digit dividend growth. However, a lot has changed post-pandemic.

What has changed for Enbridge in the last few years?

Since 2021, Enbridge has drastically reduced its dividend growth rate to 3% from the pre-pandemic level of 10%. Also, the stock price has grown significantly since 2024 after the company acquired three US gas utilities. Its share price surged 60% between June 2024 and June 2026, while the dividend per share grew by only 3%. This reduced the dividend yield from 7% to below 5%.

Enbridge is investing heavily in building new gas pipelines and renewable energy projects for hyperscaler data centres. It aims to spend almost US$40 billion in capital over the next three years on new projects, with more than $9 billion worth of projects expected to come online in 2027. These projects will open new cash flow streams. However, the first few years will be marked by high depreciation to cover the capital cost. This has reduced the scope of higher dividend growth returning anytime soon, which means the yields will also remain around 5%.

Enbridge’s dividend policy states that 60–75% of the distributable cash flow (DCF) will be paid out in dividends. For high yields and growth rates to return, DCF has to grow, for which new projects have to pay off a significant portion of their debt. Only then will a majority of the cash flows they generate be made available for distribution.

What does slow dividend growth mean for existing Enbridge shareholders?

Enbridge is still a good stock to hold for those who accumulated the shares below $50 and have locked in a 6–7% yield. The 3–5% dividend growth will continue to give them inflation-adjusted passive income as the company invests in its next leg of growth. However, now may not be a good entry point to accumulate more shares as Enbridge trades at an all-time high of around $79.

There are better dividend stocks to take note of if you are looking to invest fresh capital.

The dividend stock I’d pick over Enbridge stock

Manulife Financial (TSX: MFC) presents an attractive dividend opportunity, even at 3.2% dividend yield. The insurer is seeing continued business growth momentum in Asia through joint ventures and acquisitions. The company has been accelerating its new business Contractual Service Margin (CSM) growth from 12% in 2023 to 28% in 2025. It expects this growth rate to stabilize at 15% in the medium term.

A CSM is the insurer’s unearned profit from active insurance policies. It realizes these earnings over time by providing claims service and risk coverage through the insurance term. When the profit from the CSM is realized, it is added to core earnings. And it is paying 45% from its core earnings as dividends.

Manulife’s Asia expansion has been one of its most successful growth stories, allowing it to outperform peers and increase its share price by 45% in a year and 152% in five years.

Why I keep coming back

Although Enbridge’s dividend yield of 4.9% still dwarfs Manulife’s 3.2% yield, the long-term growth prospects are brighter for Manulife because of its 10% dividend growth rate. A $10,000 investment in both will earn you annual dividend income of $488.90 and $320.10, respectively.

The higher dividend income makes Enbridge a stock to hold, but 10% dividend growth and a dividend reinvestment plan make Manulife a stock to accumulate for the long term. Manulife’s $320 dividend income, growing at a 10% compounded annual growth rate (CAGR), could overtake Enbridge’s dividend in 10 years.