With so many firms offering dividends, it can be difficult to find the correct income stocks to produce consistent dividend income. But if you look for companies that have increased their dividends consistently and are financially stable, you might find some good long-term investments.
For 29 years in a row, Enbridge Inc., a behemoth in the Canadian energy infrastructure sector, has raised its dividend.
Here we’ll take a look at why dividend stock consistency is so important, what makes Enbridge a great income investment, and why the stock has great potential to keep increasing its high yield in the future.
Why Consistency Matters for Dividend Investors
Consistency should be your first focus while building a dividend stock portfolio to generate consistent passive income. Income investors want stability, and unpredictable dividends provide it to them.
The best dividend stocks exhibit these key traits:
- A long track record of maintaining dividend payments, even through recessions and downturns
- Steady increases in the dividend amount over time
- Reasonable payout ratios, signaling the dividend is sustainable
- Growing earnings and cash flows to support ongoing dividend growth
A precipitous fall in stock valuation is common for companies whose dividends are reduced or suspended. Investors can create long-term revenue streams by concentrating on reliable payers and growers.
Enbridge: A Top Canadian Dividend Grower
Enbridge has a perfect track record when it comes to dividend reliability and consistency, with a payout history that spans 69 years and 29 years of continuous annual dividend increases.
The dividend was increased by 3.1% to $0.9150 per share, or $3.66 per year, by Enbridge in November 2022. A future yield of 7.8 percent is rather good for the stock.
However, the increase in dividends is equally impressive. The dividend payout from Enbridge has increased at a rate of 10% per year on a compounded basis throughout the last 29 years.
The dividend increase will mirror the rate of growth of the company’s underlying distributable cash flows per share over the medium term. Investors should anticipate continued dividend growth in the near future, as Enbridge aims for an average annual DCF growth of 5-7%.
Why Enbridge’s Dividend Remains Secure
It takes more than luck to keep up a dividend growth streak of this magnitude for almost 30 years. In order to sustain and increase its dividend payments to shareholders, Enbridge has deliberately established an energy infrastructure company that produces consistent, repeatable cash flows.
Enbridge manages a wide variety of assets across North America, including oil and gas pipelines, storage facilities, natural gas utilities, and renewable energy projects. It is the biggest energy infrastructure firm in North America.
Exceptional cash flow resilience is provided by the fact that nearly all of the company’s cash flows come from investment-grade customers.
In the future, Enbridge plans to expand into renewable energy and low-carbon infrastructure as part of a $17 billion planned capital program that will also update and extend its systems.
Solid cash flow and dividend growth are anticipated to be fuelled by these projects in the future years. Enbridge is also actively pursuing accretive acquisitions to speed up its expansion, in addition to its organic growth.
To sum up, Enbridge seems to be in a strong position to sustainably increase its high-yield dividends for the foreseeable future, thanks to its stable current operations, substantial growth projects that will release cash flows in the future, and potential acquisition targets.
If you’re an income investor seeking a company with a healthy dividend and good potential for growth, look no further than Enbridge.
More Read
The Bottom Line
Focusing on consistency is still a winning technique when trying to find dependable, rising dividend income. Income investors can be certain that companies that have paid dividends for decades and have increased them every year will continue to do so.
Enbridge is the most complete Canadian dividend stock. Enbridge provides income investors with the ideal combination of present yield and prospective income growth, thanks to its 29 consecutive years of dividend increases and ahead yield approaching 8%.
Enbridge is requesting that Canadians who own dividend stocks think about it if they are looking for stable, long-term income to supplement pay or save for retirement.