Dividend stocks are compounding machines. The combination of income and growth that these investments provide can really add up over the years.
Energy infrastructure giant Enbridge (ENB +1.48%) is a prime example. It has turned a $50,000 investment made three decades ago into more than $1.1 million today. The low-risk dividend stock has plenty of fuel to continue enriching investors going forward. Here's how much you'd need to invest in the Canadian pipeline and utility company to become a millionaire in 30 years.
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The math to $1 million
Enbridge has been a terrific investment over the past three decades. The energy infrastructure company has generated an average annualized total return of 13.5%. A major driver is its high-yielding, steadily rising dividend. Enbridge has increased its payout every year for more than three decades (in Canadian dollars). That growing dividend income has driven the bulk of its total return over the past 30 years:
However, you don't need a big upfront investment or a 13.5% annualized return from an investment in Enbridge to grow into $1 million in three decades. Another path to $1 million is to invest $5,000 into Enbridge upfront and an additional $500 each month. At that investment rate, Enbridge would only need to deliver a 10% annualized total return to reach over $1 million in three decades. That more conservative 10% annualized return matches the historical returns of dividend growth stocks over the past 50 years.
An achievable return
Enbridge currently pays a 5% dividend yield. That's half the required return from dividend income alone. Enbridge would only need to grow its earnings by around 5% per year to boost its total return to 10% annualized, assuming its share price rises with its earnings.
That earnings growth rate aligns with Enbridge's current outlook. The company expects to grow its distributable cash flow per share at an annual rate of around 5% after this year. That should support dividend growth of up to 5% each year. Enbridge backs its near-term growth forecast with a massive 37 billion Canadian dollar ($26.8 billion) backlog of commercially secured expansion projects that it expects will enter service through 2030. Projects include new oil and gas pipelines, gas utility expansions, and renewable energy projects.
Enbridge is currently pursuing another CA$50 billion ($35.5 billion) of investment opportunities through the end of the decade. This includes new gas infrastructure, liquids pipelines, lower-carbon projects, gas utility projects to support AI data centers, and more renewable energy capacity. The company is in a strong position to continue growing for decades as it supports rising energy demand, especially for cleaner energy sources such as gas and renewables. Enbridge is also investing in lower-carbon new energy technologies, including hydrogen, renewable natural gas, and carbon capture and sequestration, to drive future growth. The company's scale and steady shift toward cleaner energy give it a very long growth runway.
A potentially enriching investment
Enbridge has a long history of growing shareholder value. The company should continue compounding investor wealth in the decades ahead, driven by its high-yielding dividend and steadily rising earnings. That makes it a lower-risk path to long-term wealth creation.
