Although oil prices have climbed again in recent weeks, investors may have noticed that Enbridge (TSX: ENB) has moved in the other direction. After topping $80 in the summer, when its yield fell below 5%, the stock has sold off and now yields roughly 5.9%.
That might sound strange for an energy stock; however, since Enbridge isn’t an oil producer, higher oil prices can have consequences well beyond the energy sector that impact the Canadian dividend stock.
For example, with the war in Iran keeping energy costs elevated, inflation worries and bond yields have risen too, putting pressure on income stocks.
Enbridge’s stock also fell almost 4% earlier this month after it announced an equity offering that ultimately raised roughly $3 billion to help fund new acquisitions.
The good news for investors is that if you’ve been looking to buy a dependable dividend stock you can own for years, the current pullback creates a chance to collect more income while Enbridge continues expanding.
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Why the energy stock’s dividend looks attractive today
Earlier this summer, when Enbridge traded above $80 per share, and its dividend yield fell to below 5%, that was the lowest the stock had yielded since 2017.
So with the yield now back to 5.9% and much closer to its 10-year average forward yield of 6.4%, the valuation is back to a much more reasonable level.
Furthermore, not only does it offer a near 6% yield, but Enbridge is also one of the most predictable and reliable dividend stocks that Canadians can own.
It operates major oil and natural gas pipelines across North America and owns gas utilities serving millions of customers.
And because it earns much of its cash flow from transporting energy and supplying customers, it’s much less reliant on the price of oil or gas than traditional energy stocks.
Furthermore, it consistently keeps its payout ratio conservative. For example, management expects distributable cash flow (DCF) of $5.70 to $6.10 per share in 2026.
That means the $3.88 annual dividend would have a payout ratio of just 68% even if Enbridge only hit the bottom of that range.
So, although the share price has come under pressure, Enbridge’s cash-flow guidance continues to support the dividend. If you’ve wanted to buy the stock, you can now collect almost 6% without having to predict when its share price will recover.
More than just a high yield for the long haul
The other reason Enbridge continues to be one of the best dividend stocks to buy and hold for years is the consistent growth it provides investors.
And while that’s evident in the growth of its DCF per share over time and 31-year dividend growth streak, it’s also evident in all the new projects Enbridge continues to bring online.
For example, just yesterday, on September 29, its $1.2 billion Aspen Point expansion entered service in British Columbia. The project adds capacity to move another 535 million cubic feet of natural gas a day through Enbridge’s Westcoast system.
And that’s just one example of how the $41 billion secured project backlog Enbridge reported at the end of the second quarter can eventually translate into a larger business and more dividend growth for investors.
In fact, management expects DCF per share to grow at an average annual rate of roughly 5% beyond 2026.
So, with Enbridge yielding almost 6% today and continuing to expand operations and bring new projects online, it’s easily one of the best dividend growth stocks Canadians can buy and hold for years.
