Is Enbridge Inc. (ENB) the Best Canadian Dividend Stock to Buy For Income Investors?

Enbridge Inc. (ENB) has long been a favorite among income-focused investors, thanks to its consistent dividend growth and high yield. But is it the best Canadian dividend stock to buy for income investors? Let's take a closer look at Enbridge's dividend history, growth prospects, and the factors that make it stand out among its peers.



Enbridge's dividend history and growth prospects are impressive. The company has paid dividends for over 69 years, with 29 consecutive years of dividend increases. This consistency is a testament to Enbridge's financial stability and commitment to returning capital to shareholders. Enbridge currently offers a forward dividend yield of 6.9%, which is significantly higher than the average dividend yield of stocks in the S&P 500 (currently 1.3%). This high yield provides investors with a substantial income stream.

Enbridge has increased its dividend at a compound annual growth rate (CAGR) of around 10% over the last 26 years. This consistent growth indicates that the company is generating sufficient cash flows to support and grow its dividend payouts. Enbridge's business model is built on long-term, inflation-indexed contracted cash flows, which provide a stable foundation for its dividend payments. The company's diversified portfolio of assets, including liquids pipelines, gas transmission and midstream, gas distribution and storage, renewable power generation, and energy services, further enhances the stability of its cash flows.

Enbridge's focus on renewable energy and low-risk assets contributes to its dividend sustainability. The company has been expanding its renewable energy portfolio, which now accounts for approximately 46% of its earnings. This includes natural gas pipelines (29%), natural gas utilities (14%), and renewable power (3%). By investing in lower carbon opportunities like renewable natural gas, hydrogen, and carbon capture and storage, Enbridge is reducing its exposure to volatile commodity prices and mitigating long-term risks associated with fossil fuels. This diversification enhances the stability of its cash flows, which is crucial for sustaining and growing its dividend.

Enbridge's acquisitions and expansion projects play a significant role in enhancing its dividend growth potential. The company's strategy of acquiring and integrating new assets, as well as investing in expansion projects, helps to diversify its revenue streams and increase its cash flows. This, in turn, allows Enbridge to maintain and grow its dividend payouts to shareholders. For example, in 2023, Enbridge acquired three natural gas utilities, which enhanced its ability to deliver reliable growth and increased its cash flows. The company estimates it has CA$8 billion to CA$9 billion ($5.7 billion to $6.5 billion) of annual investment capacity between its excess free cash and balance sheet availability. This investment capacity, along with its commercial project backlog, drives Enbridge's view that it can grow its EBITDA by around a 7% to 9% annual rate through 2026 and roughly 5% per year after that. This visible earnings growth should enable Enbridge to continue increasing its dividend, providing a reliable source of income for shareholders.



In conclusion, Enbridge's dividend history and growth prospects stand out among Canadian dividend stocks due to its consistent dividend growth, high yield, stable cash flows, focus on renewable energy, and strong financial flexibility. The company's acquisitions and expansion projects further enhance its dividend growth potential, making it an attractive investment option for income-focused investors. However, it is essential to conduct thorough research and consider your investment objectives and risk tolerance before making any investment decisions.