Enbridge (ENB 0.71%) has treated its investors like dividend royalty over the years. The Canadian energy infrastructure giant has increased its payout for 27 straight years, growing it at a 10% compound annual rate. That's an impressive performance, especially considering Enbridge operates in the volatile energy sector.
Enbridge should have plenty of fuel to continue growing its dividend in the future, especially after adding another 3.8 billion Canadian dollars ($2.8 billion) of expansion projects in the third quarter. Add that growth to its high-yielding payout (Enbridge currently yields over 6%), and it's a stock that income investors will want to buy hand over fist these days.
Adding more power sources
Enbridge already had a lot of growth lined up heading into the third quarter. It entered that period with almost CA$13 billion ($9.6 billion) of capital projects in its backlog. That gave it the line of sight that it could grow its cash flow per share at a 5% to 7% annual rate through at least 2024.
The energy infrastructure giant added to that already impressive total in the third quarter by securing several new expansion projects. The biggest one was the CA$3.6 billion ($2.7 billion) T-South expansion of its B.C. natural gas pipeline system. The project will increase pipeline capacity to support growing natural gas demand in the Pacific Northwest. Enbridge expects that project to enter service in 2028.
Enbridge also added a couple of smaller expansion projects. It's building four additional oil storage tanks at its Enbridge Ingleside Energy Center along the U.S. Gulf Coast and secured two renewable natural gas (RNG) projects in Canada. It will invest about CA$200 million ($148 million) into the projects, which it expects to complete between 2024 and 2026.
In addition, the company acquired onshore renewable energy project developer Tri Global Energy for $270 million. That company has a large backlog of projects presold to third parties. It also has a large early-stage development pipeline that can enhance Enbridge's long-term growth profile.
Balanced growth
Enbridge has now secured CA$8 billion ($5.9 billion) of new organic expansions this year. That has boosted its total backlog to CA$17 billion ($12.6 billion), with over CA$10 billion ($7.4 billion) scheduled to enter service in 2024 and beyond. These projects should give the company plenty of fuel to continue growing its cash flow and dividend well beyond its current outlook.
The company has expansion projects across all four of its core franchises. Gas transmission is its biggest growth driver following the addition of the T-South expansion. Several sizable projects will come online through 2028, including the T-North expansion and its Woodfibre LNG investment.
Enbridge also has several gas distribution and storage expansion projects underway that should start service by 2026. The company also has several renewable power and new energies projects under construction, including a few offshore wind energy farms in Europe that will come online through 2025. Meanwhile, the storage capacity addition at Ingleside added some growth to its liquids pipeline segment.
This diversified growth profile showcases Enbridge's ability to continue meeting current global energy demand while it slowly transitions to the lower-carbon energy required in the future. It also shows that the company can continue growing at a healthy rate well past 2024.
Even more growth ahead
Enbridge has a long history of growing its cash flow and dividend. That should continue in the future, especially after the company added billions of dollars of additional organic expansions in the third quarter. With increasingly visible growth through at least 2028, dividend investors should consider buying shares of Enbridge hand over fist.
