Balance sheet debt is rising as the Canadian government accelerates key infrastructure projects. This has created optimism and driven prices of infrastructure stocks after three years of sluggish growth post-2022. Among them is energy infrastructure stock Enbridge (TSX: ENB).
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The $41 billion backlog
Enbridge is a dividend aristocrat that has been paying dividends from its age-old pipeline infrastructure critical to transmitting oil from Canada to the United States. Until 2022, things were smooth sailing, with exports and oil demand at normal levels. The energy sector took a turn in 2022, as the Russia-Ukraine war revived old oil refineries and changed the global energy landscape.
Global wars have reignited energy trade. For the first time in 20 years, Canada decided to accelerate energy infrastructure investment and look beyond America for its energy exports. It is exploring the Pacific West to export oil and gas to Asian countries. This led to the beginning of Canada’s first LNG Canada export facility in 2025.
Energy companies, from Enbridge to TC Energy to Pembina Pipeline, are firing all cylinders to make the most of this opportunity. They are pouring in capital to capture a larger piece of energy exports. Enbridge’s capital program shows opportunities to reinvest in the business.
| Year | Secured Capital Program (US$ Billion) | Capital Spent (US$ Billion) |
| 2021 | 10 | 1 |
| 2022 | 18 | 5 |
| 2023 | 24 | 2 |
| 2024 | 26 | 5 |
| 2025 | 39 | 11 |
| 2026 | 41 | 12 |
Enbridge’s interest in the West Coast natural gas pipeline
Enbridge is also focusing on the Pacific West and looks to claim a significant share of Canadian LNG exports from the West. Its biggest capex project is the $4 billion Sunrise expansion program in the West Coast system, expected to become operational by 2028. It has secured $2.7 billion in funding in a joint venture with KKR and Apollo by offering them a 29% interest. Enbridge will retain majority ownership and operational control and pay distributions to the investors as projects enter service. It has the option to repurchase this joint venture interest between the seventh and fourteenth year. This funding round shows how the terms are favourable for Enbridge.
Like West Coast, Enbridge has secured capital for all $41 billion of capital projects, a majority of which are expected to come online by 2029. So far, Enbridge has spent $12 billion of the $41 billion capex, hinting at strong execution.
The capex brings with it high financing costs. But since most projects are brownfield expansions with faster turnaround, they keep pace with financing costs.
Why Enbridge’s $41 billion backlog is better than chasing a higher yield
Reinvestment opportunities push dividend growth on the back burner in the short term but increase stock price as the asset base grows. Once the projects come online and start earning free cash flow, dividend growth picks up.
After rallying 25% in the first half of 2026, Enbridge stock has dipped 27% since July, when it announced the acquisition of Tallgrass’ crude transportation business and raised equity financing for it.
Enbridge’s $41 billion capex looks overwhelming at first as it has grown fourfold in five years. But energy is a cyclical sector, and the current supply chain transition is a golden ticket to Charlie’s Chocolate Factory. Until now, the Mainline was Enbridge’s key revenue driver. Had it not invested in the Mainline in the past, it wouldn’t be paying a 5.8% dividend yield and growing dividends for 30 consecutive years.
A higher yield comes when there are no significant reinvestment opportunities. High yield and capex acceleration cannot go hand-in-hand. We have examples all over the place from BCE to Slate Grocery REIT to Algonquin Power & Utilities. They accelerated capex or made acquisitions while retaining their dividends. When interest rates grew, finance costs went through the roof, straining their free cash flow. This increased their dividend payout ratio to alarming levels, forcing them to cut dividends.
Enbridge continues to manage its FCF and keep its dividend payout ratio within its target range of 60–70% despite the increasing capex. With interest costs aligned to project cash flows, Enbridge’s 3% dividend growth is a safer option than high yield, as Enbridge leaves room to accelerate dividend growth in the long term.
