The Set-It-and-Forget-It Dividend Stock for Your Portfolio

Enbridge (TSX:ENB) is a standout dividend pick to own for the long haul as its growth streak keeps going strong.

Key Points
  • Building wealth is often simplest when you extend your time horizon, do the upfront homework, and then hold great businesses instead of constantly trading for short-term gains.
  • Enbridge looks like a “buy and hold” dividend name after its pullback, with a high yield again and a long record of protecting and growing the payout despite rate headwinds.

Setting it and forgetting it may very well be one of the best low-effort ways to build wealth over prolonged periods of time. Indeed, less may very well be more when it comes to investment decisions, provided you’ve put in more than enough due diligence beforehand.

Either way, I’m a huge advocate for extending your investment horizon as far as it can go, whether it’s 10 years, 15 years, or even closer to 30 years. Of course, it’s easy to say you’d be willing to hang onto shares of a company for decades at a time until it’s in your portfolio and it’s deep in the red. Indeed, your patience is sure to be tested in the first year or so.

Perhaps it’s no mystery as to why the average holding period isn’t as lengthy as it used to be. Combined with reduced trading friction and a focus on scoring near-term gains, it’s no wonder why your average investor is thinking more about buying low and selling high rather than owning a piece of a business for the long haul.

Hourglass and stock price chart

Source: Getty Images

Buying great businesses and owning them for as long as you can

Indeed, it’s nice to take profits where there are profits to be had. But when it comes to those truly magnificent companies that keep on finding new ways to reinvent themselves and keep their growth and margins going strong, perhaps it’s best to just buy, set, and forget for at least a few years. Think about all those solid tech firms that have effectively adapted to the AI age.

They were strong businesses before the boom, and they’ll continue to be strong as new technological shifts and opportunities arise. What’s even more worthwhile to stash away for the years are the dividend payers that keep on raising their payouts year after year.

As the dividend payments keep moving higher (sometimes at rates well north of inflation), it makes sense to hold and collect, even if you’re tempted to take profits at times when you might not need the extra cash.

Amid inflation and technological disruption (think about AI and its impact), perhaps it’s best to keep owning great companies, rather than trying to set unrealistic expectations for a swing trader looking to land a gain on a week-to-week basis or, worse, a day trader, who will be up against it from the get-go.

Enbridge

These days, I find Enbridge (TSX: ENB) to be a near-perfect dividend payer to accumulate and just forget you own it for the next several years. The company has a stellar dividend-growth streak and the ability to keep investors satisfied with raises, even during times when headwinds outdo tailwinds.

After a 17.5% decline from recent peaks, the shares are yielding 5.9% again. That’s a fantastic deal in my books, even if you think the risk-free rate is bound to rise as the Bank of Canada feels a bit more pressure to hit the rate-hike button or run the risk of runaway inflation and a further drop in the loonie relative to the greenback.

Indeed, higher rates aren’t a friend of the pipelines. But, in my view, the rate trajectory is not the reason to own shares.

Rather, it’s the strong long-term fundamentals, growing cash flows, and the robust managers who I’ve noted will go to great lengths to keep their dividend intact for their income-oriented shareholders. At 20.4 times forward price-to-earnings (P/E), ENB is a wonderful cash cow at a fair price.

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.

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