Buying this 6.8%-yielding oil and gas stock now could earn you solid returns in the long term.
Enbridge (ENB 0.31%) is one of the largest crude oil and natural gas pipeline companies in North America. The business is largely immune to the fluctuations in oil and gas prices as Enbridge generates almost 98% of its cash flows from long-term contracts or cost-of-service arrangements. Thanks to this stability in cash flows, Enbridge has been one of the most reliable dividend stocks in the energy sector.
Enbridge has paid regular dividends for more than 69 years now and increased them every year for the past 29 consecutive years. Its dividend grew at a compound annual rate of 10% during the period. If you buy this 6.8%-yielding stock now, you can even earn $1,000 in annual dividend income. Here’s how.
Enbridge is based out of Canada and recently declared a quarterly dividend of 0.915 Canadian dollars per share. That equals CA$3.66 per share in annualized dividend, or $2.67 per share at the current exchange rate. So at the stock’s trading price of $38.70 a share as of this writing, buying roughly 375 shares, or investing around $14,515 in Enbridge now, can fetch you an annual dividend income of $1,000.
This investment could be totally worth it given Enbridge’s prospects and high yield.
Why Enbridge is a great dividend stock to own
In early August, Enbridge raised its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) outlook for 2024 and maintained its distributable cash flow (DCF) guidance of CA$5.40 to CA$5.80 per share. That DCF comfortably covers Enbridge’s annualized dividend of CA$3.66 per share.
Enbridge recently acquired two natural gas utilities from Dominion Energy, is on track to acquire the third, and has multiple other growth projects in the pipeline. Earlier this month, Enbridge also reaffirmed its financial goals through 2026, including 7% to 9% growth in adjusted EBITDA, 4% to 6% growth in adjusted earnings per share, and 3% growth in DCF per share. As its DCF grows, so should dividends.
Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Enbridge. The Motley Fool recommends Dominion Energy. The Motley Fool has a disclosure policy.
