ENB:CC - Why Enbridge Stock Belongs in Every Portfolio
2024-03-29 16:40:00 ET
Finding that perfect mix of investments that can provide growth or income-earning potential takes time. Enbridge ( TSX:ENB ) is one option that can provide both, and here’s why Enbridge Stock is a must-have for your portfolio right now.
All about the Enbridge that you do know
Most investors are familiar with Enbridge stock. The company is an energy infrastructure behemoth with massive tentacles embedded in multiple parts of the market.
First and foremost, we have Enbridge’s pipeline network. This includes segments for both natural gas and crude oil, which together comprise the largest and most complex pipeline system on the planet.
As defensive as that sounds, there is another point worth noting about that pipeline network. Enbridge generates a reliable revenue stream from the segment, which makes up most of the company’s revenue. The reason for that is the sheer volume hauled and the consistent pricing involved.
Specifically, Enbridge charges for the use of its network, and not by the volatile price of the commodity being hauled. This means that Enbridge is largely immune to the volatile price of crude. If anything, the entire market is reliant on Enbridge to provide that service due to the sheer volume involved.
In short, Enbridge hauls nearly one-third of the crude oil produced in North America along its massive pipeline system. Turning to natural gas, Enbridge transports one-fifth of the natural gas needs of the U.S. market.
In other words, Enbridge is a highly defensive and necessary business. But that’s not the only reason why investors should buy Enbridge stock.
The parts of Enbridge you may not know about
Apart from that lucrative pipeline business, there are several other parts of Enbridge for investors to consider. This includes a natural gas utility business and a growing renewable energy operation.
Enbridge’s natural gas utility is now the largest in North America, thanks to a trio of acquisitions completed last year. The seven million customers served by Enbridge provide yet another defensive revenue stream for the company.
Turning to renewables, Enbridge boasts a portfolio of over 40 mainly wind and solar facilities located across Europe and North America. Like the utility business, these facilities generate a reliable revenue stream backed by regulated contracts.
In total, Enbridge’s renewable energy business generates enough power to meet the needs of over 1.1 million homes. Enbridge is also continuing its commitment to investing in renewables. Over the past two decades, the company has dropped over $9 billion into the segment.
Enbridge’s dividend is a must-have
One of the main reasons why investors seek out an investment like Enbridge stock is for the dividend it offers. And as of the time of writing, that dividend works out to an insane 7.48% yield.
This means that investors who drop $30,000 into Enbridge (as part of a larger, diversified portfolio) can expect to generate an income of over $2,200. Investors who aren’t ready to draw on that income yet can choose to reinvest those dividends to allow them to grow further.
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One final point prospective investors should note is that Enbridge has provided investors with annual upticks to that dividend for three decades without fail.
In other words, investors who buy Enbridge stock today can expect those dividends to continue growing over the longer term.
Enbridge stock: You should buy it
While every stock carries some risk, there are some stocks, like Enbridge, that provide substantial defensive moats to offset some of that risk.
In my opinion, Enbridge is a great long-term investment that should be a core holding in any well-diversified portfolio.
The post Why Enbridge Stock Belongs in Every Portfolio appeared first on The Motley Fool Canada .
Fool contributor Demetris Afxentiou has positions in Enbridge. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy .
2024