Is Enbridge Still a Buy for Long-Term Dividend Investors?

In an era where climate-conscious investing and income generation often seem at odds, Enbridge Inc. (ENB) stands as a compelling case study. With a 5.89% dividend yield as of August 2025—the highest in its 70-year history—Enbridge has long been a magnet for income-focused investors. Yet, in a world grappling with energy transition risks, the question remains: Can this Canadian energy giant maintain its high yield while navigating the shift to a low-carbon economy?

A Dividend Powerhouse with a 9% Growth Legacy

Enbridge's dividend trajectory is nothing short of remarkable. Over the past 30 years, the company has delivered a 9% compound annual growth rate (CAGR) in dividends, with a payout ratio consistently pegged at 60-70% of Distributable Cash Flow (DCF). This discipline has allowed Enbridge to raise its dividend by 3% in December 2024, bringing the annualized payout to $3.77 per share. The next payment of $0.94250 per share is scheduled for September 1, 2025, with ex-dividend on August 15. For context, the S&P 500's average yield hovers near 1%, making Enbridge's offering particularly attractive.

However, high yields alone cannot sustain a stock's long-term appeal. Investors must assess whether Enbridge's strategic initiatives and financial health justify its current valuation.

Strategic Growth: Balancing Fossil Fuels and Renewables

Enbridge's 2025 strategic plan, dubbed “measured, pragmatic, all-of-the-above,” reflects its commitment to both traditional and emerging energy sectors. The company's $32 billion secured growth backlog includes projects like the 600 MW Clear Fork Solar facility in Texas and the North Aitken Creek gas storage expansion in British Columbia. These projects align with Enbridge's diversification strategy, which now spans liquids pipelines, gas transmission, gas distribution, and renewable power generation.

A critical factor is Enbridge's acquisition of three U.S. utilities in 2024, creating the largest natural gas utility platform in North America. This move not only diversifies revenue streams but also positions Enbridge to capitalize on the continued role of natural gas as a bridge fuel in the energy transition.

Mitigating Carbon Transition Risks

Enbridge's risk management framework is a cornerstone of its long-term sustainability. The company integrates climate scenarios from the International Energy Agency (IEA), including the New Policies Scenario (NPS) and Sustainable Development Scenario (SDS), to stress-test its assets. For instance, its liquids pipelines (LP) segment, which transports 25% of North American crude, is resilient due to its connectivity to competitive refineries and low transportation costs.

Moreover, Enbridge has adopted region-specific internal carbon pricing and methane reduction initiatives, reducing emissions intensity by 10% since 2018. Its engagement with policymakers to avoid carbon leakage—where stringent regulations force emissions to shift to less regulated regions—further underscores its proactive stance.

Financial Health: DCF, Debt, and Dividend Safety

Enbridge's financials remain robust. In Q2 2025, Distributable Cash Flow (DCF) hit $2.9 billion, with a Debt-to-EBITDA ratio of 4.7x, well within its target range. This leverage provides flexibility to fund its $9–10 billion annual capital expenditure program while maintaining dividend cover at 1.0x.

The company's $50 billion longer-term opportunity set, including projects like the Woodfibre LNG expansion, ensures a pipeline of growth. Notably, Enbridge's DCF per share is projected to stay between $5.50 and $5.90 in 2025, supporting its 4-6% annual dividend growth target through 2026.

The Verdict: A Buy for Patient Investors

For long-term dividend investors, Enbridge presents a rare balance of yield, growth, and risk mitigation. Its 5.89% yield is among the most competitive in the market, while its strategic investments in renewables and gas infrastructure position it to thrive in a carbon-conscious world. The company's disciplined capital allocation, strong DCF generation, and proactive approach to climate risk further cement its appeal.

However, investors should remain mindful of potential headwinds. A rapid shift to renewables or regulatory overreach could pressure Enbridge's traditional assets. That said, the company's diversified portfolio and secured growth projects mitigate these risks.

Final Recommendation: Enbridge is a buy for investors seeking a high-yield, low-volatility holding with a clear transition strategy. While not a pure-play on renewables, its hybrid model offers a pragmatic path to aligning with global decarbonization goals while sustaining dividends. As the energy transition unfolds, Enbridge's “all-of-the-above” approach may prove to be its greatest strength.