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Should You Buy Enbridge Stock for its 8 Percent Yield?

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Image source: Getty Images

Written by Demetris Afxentiou at The Motley Fool Canada

Enbridge (TSX:ENB) is a name that most Canadian investors should be aware of. Part of the reason for its notoriety stems from its juicy if not insane 8% dividend. But is that the only reason investors should opt-in to buy Enbridge stock?

Fortunately, there’s much more to love about Enbridge. Here’s a rundown of the various reasons why investors may want to buy Enbridge stock — including its 8% dividend.

Enbridge has plenty for investors to love

Enbridge is an energy infrastructure gem. The company generates the bulk of its revenue from its pipeline business, and there’s a good reason for that. Those pipeline segments transport considerable volumes across both its crude and natural gas segments, making them defensive in nature.

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More specifically, Enbridge transports nearly one-third of all North American-produced crude. On the natural gas side, Enbridge transports approximately one-fifth of the natural gas needs of the entire U.S. market.

Let that immense volume sink in for a moment, because that’s not even the best part.

Incredibly, Enbridge doesn’t charge for use of that network based on the volatile price of commodities hauled. Enbridge generates a recurring revenue stream from its pipeline business that isn’t impacted directly by market volatility.

But that’s not all Enbridge does.

The company also operates a growing renewable energy business. That segment includes over 40 generation facilities located across North America and Europe. Collectively, those facilities have a net capacity of just over 2,150 megawatts, which is enough to power 966,000 homes.

The company also operates a natural gas utility business. The segment provides yet another recurring source of revenue for the company. The segment also witnessed major growth recently, which is a noteworthy mention.

Specifically, Enbridge announced a trio of acquisitions last month that will add to its already impressive portfolio. The three acquisitions were for U.S.-based East Ohio Gas Company, Questar Gas, and PSNC.

As a result of these acquisitions, Enbridge’s utility business has propelled into position as the largest natural gas utility in North America. This only adds to the defensive appeal and why you should buy Enbridge stock.

Let’s talk about that dividend

Investors continue to turn to Enbridge not only for its defensive appeal but also for its juicy dividend. The company provides investors with a quarterly dividend, which currently boasts an insane yield of 8.06%.

This means that investors who invest $35,000 in the stock can expect to generate an income of over $2,800.

One of the reasons why that yield seems high is because the stock, like most of the market, has dipped over the past year. In the case of Enbridge, that dip is 10% year to date and 14% over the trailing 12-month period.

Despite that dip, Enbridge remains a great long-term option that also provides investors with annual bumps to that dividend. In fact, Enbridge has kept that annual cadence up for nearly three decades without fail.

Should you buy Enbridge stock right now?

No investment, even the most defensive, is not without some risk, and that includes Enbridge. Fortunately, Enbridge is a well-diversified option that caters to both growth- and income-minded investors.

Throw in one of the better-paying dividends on the market that offers annual upticks, and you have a stellar stock to own right now.

In my opinion, investors should buy Enbridge stock, not just for its 8% dividend but for the whole package.

The post Should You Buy Enbridge Stock for its 8 Percent Yield? appeared first on The Motley Fool Canada.

Should You Invest $1,000 In Enbridge?

Before you consider Enbridge, you'll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in October 2023... and Enbridge wasn't on the list.

The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 25 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks * Returns as of 10/10/23

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

2023