Enbridge (ENB 0.78%) has demonstrated dividend durability for decades. The Canadian pipeline and utility company has paid dividends for over 70 years, raising its payout annually for the past 30 years. That's remarkable resilience in the volatile energy industry.
The energy company expects to have plenty of fuel to continue increasing its high-yielding dividend (more than 5.5% current yield) for many years to come. It recently added more visibility to its growth outlook, which extends through the end of the decade. That should give investors the confidence that they can hold this income stock until at least 2030.
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Adding more fuel to its growth engine
Enbridge recently reached a final investment decision on two new natural gas pipeline projects. The Canadian energy infrastructure giant signed commercial agreements to support the Algonquin Reliable Affordable Resilient Enhancement project (AGT Enhancement). Additionally, its Matterhorn joint venture (JV) approved the construction of the Eiger Express Pipeline.
The AGT Enhancement will deliver about 75 million cubic feet per day of incremental natural gas to customers in the U.S. Northeast. These additional supplies will help increase reliability and improve affordability in the region, supporting stable regional demand and contributing to Enbridge's regulated cash flows. Enbridge expects to invest $300 million in the project, which it anticipates completing in 2029.
NYSE: ENB
Key Data Points
Meanwhile, the Eiger Express Pipeline will transport up to 2.5 billion cubic feet per day of natural gas from the Permian Basin in West Texas to the Katy area closer to the Gulf Coast. This project will enhance Enbridge's presence in a key growth region, positioning it to benefit from increased production and export demand. The company expects this 450-mile pipeline to enter commercial service in 2028. Enbridge's investment in this project will come through its Matterhorn Express Pipeline Joint Venture. The company acquired a 10% stake in this JV earlier this year for $300 million. Combined with its Whistler JV, Enbridge will own interests in up to 10 billion cubic feet of gas pipeline capacity in the region once Eiger comes online.
Visible growth through 2029 with more in the pipeline
The addition of these two projects further enhances and extends the visibility of Enbridge's long-term growth outlook. It now has several gas transmission projects underway, including multiple projects scheduled to enter service in 2028 and 2029. Enbridge also has several liquids pipeline projects, and gas distribution and storage projects with in-service dates through 2028. Additionally, it has renewable energy projects on track to start commercial service through 2027, including Clear Fork Solar. Overall, it has more than 30 billion Canadian dollars ($21.7 billion) of secured capital projects through the end of the decade.
This robust growth-project backlog provides significant visibility into Enbridge's growth outlook. The company expects to deliver 3% compound annual-distributable cash flow per-share growth through 2026. It expects that growth rate to accelerate to around 5% annually thereafter. This outlook supports Enbridge's expectation of delivering dividend growth of up to 5% per year.
Enbridge has multiple, additional growth-capital projects under development. The company revealed at its investor day earlier this year that it was pursuing around CA$50 billion ($36.2 billion) of growth opportunities through 2030. These projects span its four core franchises, with nearly half of its potential growth opportunities centered around expanding its gas transmission infrastructure. The company has ample financial capacity to continue funding new growth opportunities thanks to its strong, post-dividend free cash flow and conservative balance sheet.
The company also has the flexibility to make bolt-on acquisitions, such as the Matterhorn investment. Enbridge routinely makes acquisitions with embedded expansion potential, which help to drive future earnings growth and support dividend increases. For example, in 2023, Enbridge acquired Aitken Creek Natural Gas Storage for CA$400 million ($290 million). It recently approved a CA$300 million ($217 million) expansion of that facility, further boosting its storage capacity and future cash flow. The company has also approved several projects to expand the three U.S. gas utilities it bought last year, which will contribute additional, stable revenue streams. Enbridge's ability to make acquisitions further enhances dividend growth.
A great dividend growth stock to buy and hold
Enbridge pays one of the most reliable dividends in the energy sector. Its substantial, secured project backlog should ensure continued dividend growth through the end of the decade. With the company's financial flexibility to secure additional growth opportunities, investors can confidently buy and hold this high-yielding energy stock for dividend income for years to come.
