Enbridge (ENB 0.75%) is at it again. The Canadian energy infrastructure giant has announced its latest dividend increase. It's raising its payout by another 3% (in Canadian dollars), extending its growth streak to 31 consecutive years.
The pipeline and utility company's high-yielding dividend (5.6% current yield) is on a rock-solid foundation. Meanwhile, with lots of growth coming down the pipeline, Enbridge should have ample fuel to continue increasing its payout in the coming years.
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The steady growth continues
Enbridge recently revealed its latest dividend payment and its financial expectations for 2026. The Canadian energy infrastructure company is boosting its quarterly dividend payment by 3% to 0.97 Canadian dollars (or $0.70 at the current exchange rate) per share (CA$3.88 annually or $2.78).
The company anticipates producing plenty of cash to cover that payout. It expects to generate between CA$5.70 and CA$6.10 per share ($4.09-$4.37) per share of distributable cash flow. That's up 3.5% at the midpoint from this year's guidance of CA$5.50-CA$5.90 ($3.94-$4.23). It would put its dividend payout ratio in the 64%-68% range, well within its 60%-70% target range. This outlook is a reaffirmation of Enbridge's expectation that it will grow its distributable cash flow per share by around a 3% compound annual rate during the 2023-2026 time frame.
NYSE: ENB
Key Data Points
Enbridge expects to benefit from several growth initiatives over the next year. It anticipates placing CA$8 billion ($5.7 billion) of growth capital projects into commercial service next year, including the Ridgeline, Aspen Point, and Longview projects in its gas transmission segment, as well as growth capital projects across its gas utilities. Additionally, the company expects to benefit from higher rates and a full-year contribution from its recent investment in the Matterhorn pipeline. These positives will help offset the impact of higher interest expenses, continued tax headwinds, and the lost income from non-core asset sales.
More growth coming down the pipeline
Enbridge plans to continue investing heavily to expand its operations in 2026. The company currently anticipates deploying about CA$10 billion ($7.2 billion) into growth capital projects next year. It expects to fully fund this capital with its post-dividend free cash flow and balance sheet flexibility. Enbridge foresees ending next year with a leverage ratio within its 4.5-5.0 times target range.
That outlay will help the company fund its remaining capital commitments on growth capital projects with 2026 in-service dates, as well as longer-term projects. Enbridge has currently secured CA$37 billion ($26.5 billion) of growth capital projects with in-service dates through 2033. It has projects underway in each of its liquids pipelines, gas transmission, gas distribution and storage, and renewables franchises. Additionally, it has several other growth capital projects under development that it could secure in the coming years.
This backlog gives the company lots of visibility into its long-term growth outlook. Enbridge's heavy investment next year sets the stage for a large wave of growth capital project completions in 2027. That helps drive the company's view that its distributable cash flow growth rate will accelerate to around 5% annually after 2026.
Enbridge's strong financial profile and growth visibility put the company in an excellent position to continue increasing its dividend. It should be able to deliver low-to-mid single-digit annual dividend increases in the coming years.
A high-quality, high-yielding dividend stock
Enbridge is continuing its annual tradition of increasing its dividend, which it has now done for 31 straight years. In all likelihood, this streak will continue for many more years, giving its strong financial profile and the growth it has coming down the pipeline. That makes Enbridge a top-notch income stock to buy and hold for the long haul.
