Down 16% and Paying 5.8%: The Case for Buying Enbridge Now

These are volatile times. On one side, global tariffs, geopolitical uncertainty, and a move towards artificial intelligence (AI) are stagnating growth for some segments. On the other side, energy prices are surging to new highs. Canada is inviting global investments in Canadian energy, logistics, and AI infrastructure. As the largest North American oil and gas pipeline company, Enbridge (TSX: ENB) is playing an active role in this.

Down 16% and paying 5.8%

Since July, energy infrastructure stocks have seen a sharp dip as they are investing large sums in building infrastructure. The capital investment phase can be risky as a significant amount is diverted to projects which will take three to five years to generate cash flow. The company takes on the risk of building these long-gestation projects, assuming things will remain as they are now. But if the geopolitical scenario changes or the regulatory landscape reduces the company’s freedom to set prices, the return on capital will take a hit, as it did with BCE and Telus Corporation.

However, investors should cut this short-term noise and view infrastructure projects from a long-term perspective. Enbridge is not building power projects and natural gas pipelines for two to five years of cash flow. It is looking at a minimum of seven years before considering buying back equity interest in new projects from investors. Until then, existing projects will fund current dividends and new projects will pay their financing costs.

The 16% dip in Enbridge’s share presents a similar opportunity to what we saw back in October 2024. Back then, Enbridge stock fell 6–7%, and as it completed the $14 billion acquisition of three U.S. natural gas utilities, the stock surged 32% to a new 52-week high. The recent 16% dip has increased the yield to 5.8%. The upcoming third-quarter earnings on November 6 will shed some light on whether it can grow dividends in line with distributable cash flow (DCF) by 5%.

I do not expect 3% dividend growth to accelerate to 5%, considering the ongoing capital programs. Now is the right time to expand and capture market share in West Coast natural gas exports. Enbridge can monetize today’s investments for decades and grow dividends at that time.

The case for buying Enbridge now

LNG export opportunity: Enbridge has always been a dividend stock. But now it could give you 20–30% capital appreciation annually for the next three to five years as it brings new projects online. It is building Woodfibre LNG to ship more liquefied natural gas (LNG) from the Pacific West. It is also investing heavily in the expansion of the West Coast system.

Government support: Moreover, the Canadian government’s initiative to expedite approval of major infrastructure projects could help Enbridge lower the risk of delays in approval and the resulting costs. It could be a key beneficiary of Canada’s proposed Productivity Mega Deduction, which will allow businesses to deduct 100% of the cost of oil and gas pipelines. If the proposal is passed, Enbridge can claim large depreciation and significantly reduce its tax bill.

Dividend payout: At a time when major dividend stocks slashed dividends amidst rising balance sheet debt, Enbridge maintained its payout ratio at 63% in the first half of 2026. Even if the project goes over budget or energy demand slows, Enbridge has financial flexibility to pay its current dividends.

Leverage ratio: Now is the time to buy Enbridge stock despite its more than $1 trillion long-term debt. That debt is 4.5 to 5 times its adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA).

Investor takeaway

If you invest $6,000 in Enbridge today, you can buy 90 shares and expect the share price to grow by 20–50% in the next three years. Moreover, you can get an annual dividend of $363.70 in 2027, which can grow to $404.80 by 2031 if Enbridge maintains 3% dividend growth.

You can grow this dividend income by using the payout to buy more Enbridge shares. Consider using a Tax-Free Savings Account (TFSA) to avoid dividend tax.