Enbridge (TSX: ENB) is down 16% from the 2026 high. Investors are now wondering if ENB is now oversold and good to buy for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on dividend income and long-term capital appreciation.
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Enbridge share price
Enbridge trades for $67 per share at the time of writing, compared to the 12-month high around $80. The pullback is giving investors who missed the big rally over the past three years a chance to buy a meaningful dip and pick up a solid 5.8% dividend yield.
Enbridge continues to drive growth through a combination of strategic acquisitions and development projects. The company recently announced two purchases in the United States, including a US$600 million deal to buy crude oil gathering infrastructure in the Permian basin, as well as a US$2.6 billion acquisition of oil pipeline, storage, and marketing assets in the U.S. Rockies region.
Enbridge also signed an agreement last month to form a new joint venture with private equity giants KKR and Apollo to fund a $2.7 billion expansion of the Westcoast natural gas pipeline system.
Enbridge’s investments have focused heavily on the United States in the past few years. The company bought an oil export terminal in Texas for US$3 billion in 2021. It then spent US$14 billion to buy three American natural gas utilities in 2024. These assets, when combined with the newest purchases and the legacy oil and natural gas transmission infrastructure, position Enbridge to benefit from demand growth for North American oil and natural gas.
On the development side, Enbridge is working through a $41 billion capital program that will see the company invest roughly $10 billion annually over the medium term on growth projects which are spread out across the business. As the new assets are completed and start to generate revenue, the boost to distributable cash flow is expected to be about 5% per year. This should enable Enbridge to maintain steady dividend growth. The company has increased the dividend for 31 consecutive years.
Risks
Rising borrowing costs are a headwind for Enbridge. Yields in bond markets are hitting multi-year highs and interest rate hikes are likely on the way in Canada and the United States as the central banks move to keep inflation under control.
The last time the central banks raised rates, in 2022 and 2023, Enbridge’s share price fell from $59 to $44. Enbridge uses debt to fund part of the growth program. Higher debt expenses can hurt profits and cut into cash that is available to reduce debt or boost dividends.
The next round of rate hikes will likely be more measured, so the impact on Enbridge shouldn’t be as sharp, but investors should prepare for additional volatility in the share price if rate hikes are larger or more frequent than anticipated.
The bottom line
Further weakness is possible in the near term, but existing owners of the stock should probably hang on at this point. New income investors might want to start nibbling at this level and look to add on any additional downside. The long-term prospects for Enbridge should be positive, and you get paid well to ride out the pullback.
