Enbridge: A High-Yielding Gem To Buy Now

In a market riddled with volatility, investors are increasingly drawn to companies offering stable cash flows and predictable dividends. Enbridge (ENB) stands out as a prime candidate, blending defensive characteristics with strategic growth initiatives in renewables and gas infrastructure. While its dividend yield has dipped below 6% in recent months, its robust financial foundation and diversified asset base position it as a resilient income play. Here's why Enbridge deserves a spot in your portfolio.

The Case for Enbridge: Defensive Cash Flow and Dividend Strength

Enbridge's regulated assets—including pipelines, storage facilities, and power infrastructure—form the bedrock of its cash flow. These assets operate under long-term contracts with governments and utilities, shielding the company from commodity price swings and economic cycles. Over 90% of its cash flow comes from fee-based or regulated operations, providing a “recession-resistant” shield in turbulent markets.

This stability is reflected in its dividend history. Enbridge has delivered a 9% compound annual growth rate (CAGR) in dividends over the past 30 years, a feat few companies can match. Even in 2025, it increased its quarterly dividend by 3.0% to $0.94250 per share, maintaining an annualized payout of $3.77. While the trailing 12-month dividend yield currently sits at 2.96% (down from a March 2025 peak of 6.45%), this reflects rising share prices rather than declining payouts.

The drop in yield doesn't negate its income appeal. A lower yield now could signal a buying opportunity if the stock price corrects, especially given Enbridge's target payout ratio of 60–70% of distributable cash flow (DCF). With DCF expected to grow steadily from major projects like the Line 3 Replacement Pipeline and renewable energy investments, the dividend remains secure.

Strategic Growth: Renewables and Gas Infrastructure

Enbridge isn't resting on its regulated asset laurels. It's actively expanding into renewables and midstream gas infrastructure, sectors critical to the global energy transition.

1. Renewables: Enbridge is targeting $5 billion in renewable energy investments by 2027, focusing on wind, solar, and hydrogen projects. Its 2024 acquisition of Green Power Energy—a developer of offshore wind farms—adds scale and expertise in this high-growth segment.

2. Gas Infrastructure: With natural gas remaining a key transitional fuel, Enbridge is upgrading its North American gas pipeline network. Projects like the Alberta Ethane Gathering System and expansions in the Marcellus Shale region ensure it stays ahead of demand for cleaner-burning gas.

These moves diversify revenue streams while aligning with regulatory trends favoring low-carbon energy.

Why Buy Now?

Valuation: At current prices, Enbridge trades at a discount to its five-year average P/DCF multiple, offering better entry terms.

Competitor Comparison: While rivals like TC Energy (TRP) yield just 1.51%, Enbridge's $3.77 annual dividend still outperforms peers in absolute terms.

Resilience in Volatility: Regulated assets and contracted cash flows mean Enbridge's performance is less tied to oil prices. Even as oil fluctuates, its core business remains insulated.

Risks and Considerations

No investment is risk-free. Enbridge faces regulatory hurdles, particularly in the U.S., and project delays could strain cash flow. However, its strong balance sheet (investment-grade credit ratings) and disciplined capital allocation mitigate these risks.

Conclusion: A Solid Foundation for Income Seekers

Enbridge may no longer offer a 6%+ yield, but its dividend sustainability, defensive cash flow, and strategic growth avenues make it a compelling buy for income-focused investors. With a diversified portfolio of regulated assets and a clear path to renewable growth, Enbridge is positioned to thrive even as macroeconomic headwinds persist.

For those prioritizing stability and long-term growth, Enbridge remains a high-yielding gem worth adding to your watchlist—or better yet, your portfolio.

Investment thesis: Enbridge's combination of defensive cash flows, dividend resilience, and strategic growth in renewables/gas infrastructure makes it a top pick for income investors. Current valuation discounts and a strong balance sheet support a “buy” rating.