Advertisement
Canada markets closed
  • S&P/TSX

    22,751.68
    +78.16 (+0.34%)
     
  • S&P 500

    5,631.22
    +15.87 (+0.28%)
     
  • DOW

    40,211.72
    +210.82 (+0.53%)
     
  • CAD/USD

    0.7313
    -0.0025 (-0.34%)
     
  • CRUDE OIL

    81.91
    -0.30 (-0.36%)
     
  • Bitcoin CAD

    86,713.59
    +4,712.01 (+5.75%)
     
  • CMC Crypto 200

    1,318.95
    +50.00 (+3.94%)
     
  • GOLD FUTURES

    2,426.70
    +6.00 (+0.25%)
     
  • RUSSELL 2000

    2,187.03
    +38.77 (+1.80%)
     
  • 10-Yr Bond

    4.2290
    +0.0400 (+0.95%)
     
  • NASDAQ

    18,472.57
    +74.12 (+0.40%)
     
  • VOLATILITY

    13.09
    +0.63 (+5.07%)
     
  • FTSE

    8,182.96
    -69.95 (-0.85%)
     
  • NIKKEI 225

    41,190.68
    -1,033.32 (-2.45%)
     
  • CAD/EUR

    0.6706
    -0.0016 (-0.24%)
     

3 Reasons to Buy Enbridge Stock Like There’s No Tomorrow

Gas pipelines
Image source: Getty Images

Written by Demetris Afxentiou at The Motley Fool Canada

Enbridge (TSX:ENB) is often mentioned as one of the best long-term stocks to add to any long-term portfolio. And while there are plenty of reasons for that view, there are a handful of key points that investors should consider when looking to buy Enbridge stock.

Here’s a look at a trio of reasons why you should buy Enbridge stock to include as part of any well-diversified portfolio.

Reason #1- Enbridge generates a reliable, defensive revenue stream

Most investors are familiar with Enbridge, but few contemplating whether to buy Enbridge stock may realize just how huge Enbridge is.

ADVERTISEMENT

Enbridge is a true energy sector behemoth, with its tentacles firmly entrenched in multiple segments of the energy sector. But there’s one segment above all others boasting massive appeal – pipelines.

Enbridge operates the largest and most complex pipeline network on the planet. That segment includes both natural gas and crude transportation, linking production and storage facilities across the continent.

The sheer volume transported is part of the reason why that pipeline business is so lucrative. Specifically, Enbridge hauls nearly a third of all North American-produced crude and one-fifth of the natural gas needs of the U.S. market across its pipeline network.

That fact alone makes Enbridge an incredibly defensive option to consider. But there’s one more key point to note.

Enbridge doesn’t charge for use of that network based on the price of the commodity hauled. In other words, irrespective of the volatile price of oil, Enbridge continues to generate a stable and recurring revenue stream.

Reason #2- Enbridge is more than pipelines

As mentioned, Enbridge’s pipeline segment generates the bulk of the company’s revenue stream, and for good reason.  But that’s not the only revenue generator prospective investors looking to buy Enbridge stock should consider.

In addition to that lucrative pipeline business, Enbridge also operates a growing renewable energy business. This includes over 40 renewable energy sites located across North America and Europe.

Those facilities are primarily wind, solar and hydro sites, which generate a reliable and recurring revenue stream. And like their fossil-fuel-burning peers, those facilities are bound by long-term regulated contacts.

In other words, the facilities generate a stable and recurring revenue stream. This allows Enbridge the ability to invest in growth and pay out a handsome income (more on that in a moment).

That reliable revenue stream extends beyond that revenue energy segment. Enbridge also operates the largest natural gas utility on the continent. This provides yet another solid revenue stream for the company that is worthy of mention.

In short, investors evaluating whether to buy Enbridge stock will not be disappointed with the stock’s revenue-generating abilities.

Reason #3 – Enbridge generates a crazy income

Perhaps one of the main reasons why investors continue to buy Enbridge stock is for the crazy dividend that the company offers. Enbridge offers investors a quarterly dividend which, as of the time of writing, works out to an insane 7.5%.

This handily makes Enbridge one of the better-paying stocks on the market. By way of example, that juicy yield means that investors who drop $40,000 into Enbridge will generate an insane first-year income of just over $3,000.

Amazingly, that’s not even the best part.

I mention first-year income because Enbridge has provided generous annual bumps to that dividend going back nearly three decades without fail. Enbridge expects that process of generous annual upticks to continue.

For those investors who are not ready to draw on that income yet, reinvesting those dividends until needed can be a major source of growth. This point alone makes Enbridge a superb buy-and-forget candidate for any portfolio.

Buy Enbridge stock today, become rich tomorrow

There’s no such thing as a stock that is truly immune from volatility. That includes even the most defensive picks, as well as lucrative buys like Enbridge. Fortunately, when it comes to investors looking to buy Enbridge stock, the company has plenty to offer.

More importantly, Enbridge is well-diversified with multiple revenue streams. In my opinion, Enbridge is a great long-term option that should be a core holding as part of any long-term, well-diversified portfolio.

Buy it now and hold it for decades.

The post 3 Reasons to Buy Enbridge Stock Like There’s No Tomorrow appeared first on The Motley Fool Canada.

Should you invest $1,000 in Enbridge right now?

Before you buy stock in Enbridge, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Enbridge wasn’t one of them. The 10 stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $17,363.76!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 26 percentage points since 2013*.

See the 10 stocks * Returns as of 6/3/24

More reading

Fool contributor Demetris Afxentiou has positions in Enbridge. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.

2024