ENB:CC - Here's Why Enbridge Stock Looks Like a Great Buy
2024-02-28 16:00:00 ET
Stock market investing is an excellent way to put your money to work and grow wealth. As opposed to leaving your money idle in a high-interest savings account, allocating some of it to investments in the stock market can help you generate significant returns.
There are several ways you can approach stock market investing to achieve financial freedom. Turning your investment portfolio into another income stream through dividend investing can be an excellent strategy.
To this end, Enbridge ( TSX:ENB ) stock can be a viable holding to consider for your self-directed portfolio. Today, we will look at this giant from the Canadian energy industry to see why it can be a good investment as the foundation for your portfolio to achieve financial freedom.
Enbridge stock
Enbridge is a $99.88 billion market capitalization multinational pipeline and energy company headquartered in Calgary. It owns and operates an extensive network of pipelines throughout North America, transporting a significant portion of crude oil, natural gas, and natural gas liquids produced and consumed in the region.
Enbridge also has a growing renewable energy business, which is setting it up for a better future in an increasingly greener energy industry.
Enbridge is an energy stock that has long been a staple holding for many investment portfolios due to its dividends. As of this writing, Enbridge stock pays its shareholders their dividends at an annualized 7.79% dividend yield. However, an unusually high dividend yield is not the only reason that makes the stock attractive.
A great defensive appeal
While it is true that the world is slowly phasing out fossil fuels, it will take time for green and clean energy to overtake the reliance on traditional energy products. Enbridge is known for its massive pipeline network that transports these commodities throughout the region.
It is not just one of the most extensive networks in North America; the company boasts one of the most extensive and complex pipeline networks worldwide.
The sheer volume of energy commodities it transports in North America makes it vital to the region’s economy. A third of all the crude oil produced in this market is transported through this company’s pipeline network.
It also transports a fifth of all the natural gas the U.S. consumes. To make things better, the company’s revenues do not rely on commodity prices. Rather, it generates revenue based on the volume of commodities it transports, protecting it from volatile crude and natural gas prices.
Foolish takeaway
Enbridge also operates the largest natural gas utility business in North America. Combined with its growing presence in the renewable energy industry, Enbridge is setting itself up for a solid future, even as traditional fossil fuels are phased out. It currently owns over 40 renewable energy facilities across Europe and North America after spending almost $9 billion over the last 20 years.
Typically, dividend yields higher than 4-5% should seem alarming. A high dividend yield is only good if the underlying company has the kind of financial strength to support the payments. To this end, Enbridge stock seems well-positioned.
As of this writing, Enbridge stock trades for $47 per share. It can be an excellent holding to consider adding to your self-directed portfolio to capture its inflated dividend yield.
The post Here’s Why Enbridge Stock Looks Like a Great Buy appeared first on The Motley Fool Canada .
Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy .
2024